In 2019, 8% of card transactions were conducted through digital wallets, a figure that grew to 29% by 2023, according to the findings.
As part of their assessment, the regulators consulted businesses and industry representatives to evaluate the implications of this trend. They found that digital wallets provide consumers with added convenience, stronger security features, and, in some cases, improved financial accessibility.
However, concerns were also raised regarding competition in the sector. Stakeholders highlighted the need for measures that would support greater market entry for new providers and support innovation. Expanding competition, in turn, could lead to a wider range of payment options for consumers.
To address these issues, the FCA and PSR shared their findings with the Competition and Markets Authority (CMA) to prevent regulatory overlap. The CMA is already investigating Apple and Google, the two dominant digital wallet providers, in relation to their control over mobile ecosystems.
Additionally, the FCA and PSR will work with the Treasury as they review the Payment Services and Electronic Money Regulations. The objective is to ensure that regulatory frameworks remain suited to a rapidly evolving payments landscape.
The regulators stated that they will continue supporting digital advancements that benefit consumers. This includes ongoing initiatives in Open Banking and contactless payments aimed at increasing competition and reinforcing the UK’s financial sector. These efforts align with wider national strategies to create a modern and resilient payments system.
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