FS25/1: Big tech and digital wallets

Read FS25/1[1]

Read our joint letter to the CMA[2]

Why we asked for feedback

In July 2024, the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) collaborated in publishing a Call for Information[3] (CfI) on big tech and digital wallets to understand the opportunities and risks that the digital wallets’ increasing popularity creates. 

The FCA’s regulatory remit gives it a particular interest in digital wallets – specifically in promoting competition between digital wallet providers, ensuring these services operate in the best interest of consumers, and assessing their resilience and any risks they may pose to the stability of the UK financial services sector.  

The PSR’s work on digital wallets supports a commitment it made in its strategy update[4] to sharpen their focus on competition and innovation in payment systems, supporting economic growth and enabling the payments ecosystem of the future. 

The FCA[5] and PSR[6] are committed to fostering growth and ensuring the UK remains a competitive global economy. Our work on digital wallets plays an important role in maintaining the UK’s position at the forefront of financial innovation, ensuring the UK remains an attractive destination for investment and a leader in the future of payments. 

We summarise in this joint feedback statement the key opportunities and issues identified by stakeholders in response to the CfI. 

Who this is for

This feedback statement will be of interest to a wide range of stakeholders, including:

• digital wallet providers
• mobile device and operating system manufacturers
• card issuers
• large and medium payment firms and smaller challenger payments firms
• trade bodies of regulated payments firms
• consumers
• merchants
• groups representing consumer or merchant interests
• national and international regulators with an interest in digital wallets

Next steps

Our proposed next steps are informed by engagement with stakeholders and other regulators. We have and will continue to engage with the CMA on potential competition issues highlighted by respondents. This Feedback Statement, along with the letter we have sent to the CMA, form our joint response to the CMA’s invitation to comment on its strategic market status investigations. This collaborative approach ensures that our measures are proportionate and support the development of a competitive digital wallets sector in the UK. 

Read our letter to the CMA in response to its invitation to comment.[2]

Given the clear and significant importance of digital wallets for consumers, competition and innovation, both authorities will continue to monitor developments and consider issues that emerge.

Background

In July 2024, the FCA and PSR collaboratively published a CfI inviting information and evidence on:

• The range of benefits that digital wallets bring for service users.
• Whether there are any features that mean payments don’t work as well as they could for consumers or businesses.
• Their role in unlocking the potential of account-to-account payments and how they could impact competition between payment systems.
• Whether digital wallets could raise any significant competition, consumer protection or market integrity issues, either now or in the future.

The CfI sought to engage effectively with stakeholders across the payments and wider financial services landscape, including digital wallet and technology providers as well as their service users.