On 19 February 2025, the United Kingdom Financial Conduct Authority (UK FCA) and the United Kingdom Payment Systems Regulator (UK PSR) published a joint Feedback Statement FS25/1: Big tech and digital wallets assessing the impact and growth of digital wallets, in response to the United Kingdom’s Competition and Markets Authority (CMA)’s Invitation to Comment on its Strategic Market Status Investigations. The response assesses competition, innovation, and regulatory concerns in the digital wallets ecosystem, particularly focusing on dominant market players such as Apple and Google, which evaluates the rapid adoption of digital wallets, the benefits to consumers, and the potential competition concerns within the sector.
The UK FCA and UK PSR conducted engagement with businesses and industry representatives to analyse the increasing use of digital wallets in the UK. According to the report, digital wallet transactions have surged from 8% of total card transactions in 2019 to 29% in 2023. The feedback gathered elaborated on several advantages of digital wallets, including: Greater convenience in transactions for consumers, Enhanced security measures reducing fraud risks and Improved financial inclusion for individuals without traditional banking access. The assessment raised concerns regarding competition within the market and the dominance of major digital wallet providers and barriers to entry for new players.
The UK FCA and UK PSR identified few areas requiring attention to enhance competition and innovation within the digital wallet ecosystem. To avoid regulatory duplication, the authorities have referred competition-related concerns to the Competition and Markets Authority (CMA), which is currently investigating the two largest digital wallet providers, Apple and Google, regarding their mobile payment ecosystems.
UK FCA and UK PSR have stated their commitment to collaborate with the UK Treasury as part of the review of the Payment Services and Electronic Money Regulations to ensure that regulations are future-proofed to accommodate technological advancements and continue to embrace digital innovation that benefits consumers, including ongoing efforts to enhance open banking, improve contactless payments, and promote fair competition in financial services.
The UK FCA and UK PSR have already shared their findings with the UK CMA so that competition concerns are addressed within the broader framework of UK market regulations. The Treasury’s review of payment regulations will determine the next steps for refining digital wallet oversight.
The UK FCA and UK PSR without drawing specific conclusions at this stage raised the need for further investigation by elaborating on the need to assess the competitive landscape of digital wallets and the interplay between digital wallet providers and payment systems and urged the UK CMA to consider interventions that ensure open access to digital wallets on reasonable terms. UK FCA and UK PSR also referenced the European Commission’s intervention on Near Field Communication (NFC) technology and suggested that similar measures should be examined in the UK context.
(Source: https://www.fca.org.uk/news/news-stories/fca-and-psr-report-digital-wallets, https://www.fca.org.uk/publication/correspondence/cma-letter-2025.pdf, https://www.fca.org.uk/publication/feedback/fs25-1.pdf)
