February 19, 2025 – The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have released a report examining the rapid growth of digital wallets in the UK and their impact on consumers and competition.
The use of digital wallets has surged in recent years, with the proportion of card transactions conducted via digital wallets rising from 8% in 2019 to 29% in 2023. This significant increase reflects a shift in consumer behavior, driven by greater convenience, enhanced security features, and improved financial inclusion for some users.
While the regulators found that digital wallets offer substantial benefits, they also heard concerns from industry stakeholders about the need to improve competition within the sector. The report highlights the necessity for regulatory measures that encourage new market entrants and innovation, ultimately expanding the range of alternative payment methods available to consumers.
To address these competition concerns, the FCA and PSR have shared their findings with the Competition and Markets Authority (CMA), which is already investigating Apple and Google over their control of mobile ecosystems. This scrutiny forms part of a broader effort to ensure that digital payment systems remain fair and accessible.
Additionally, the FCA and PSR will work with the Treasury as part of the ongoing review of the Payment Services and Electronic Money Regulations. The aim is to ensure that regulatory frameworks keep pace with technological advancements and market developments.
The regulators reaffirmed their commitment to fostering digital innovation that benefits consumers. Their ongoing initiatives include promoting open banking and enhancing contactless payment systems to improve competition and strengthen the UK’s financial landscape. These efforts align with the National Payments Vision, which seeks to create a modern, resilient, and innovative payments ecosystem that meets the evolving needs of businesses and consumers alike.
As digital wallets continue to grow in prominence, regulatory bodies remain focused on striking a balance between encouraging innovation and ensuring fair competition within the financial sector.
Source: https://www.psr.org.uk/news-and-updates/latest-news/news/fca-and-psr-report-on-digital-wallets/
