The UK's Financial Conduct Authority has launched a competition investigation into Mastercard, Visa, and PayPal over suspected anti-competitive conduct tied to PayPal's digital wallet.
The regulator announced the probe on May 2026, clarifying that it had not reached any conclusions as to whether competition law has been breached. PayPal disclosed the investigation in a regulatory filing the same week. All three companies have confirmed they are cooperating with the FCA's inquiry.
Scrutiny of digital wallet arrangements
The FCA's investigation centres on the commercial arrangements between Mastercard, Visa, and PayPal concerning how consumers fund transactions through PayPal's digital wallet, specifically, which payment methods are prioritised or incentivised at the point of checkout.
The FCA holds statutory powers to conduct competition investigations across financial services markets, making it one of the principal regulators with jurisdiction over payment network behaviour in the UK.
This is not the first time similar concerns have reached the attention of authorities. In September 2024, the US Department of Justice filed an antitrust lawsuit against Visa, alleging the card network had illegally monopolised the debit card market. Prior to that action, in 2023 the department had sought information regarding Visa's agreements with PayPal, arrangements that were said to discourage consumers from paying via bank account or checking account transfers rather than through card-based instruments when using PayPal's wallet.
The FCA investigation appears to address related structural concerns in the UK market, focusing on how contractual or commercial arrangements between card networks and a major digital wallet provider could restrict competition in how consumers choose to pay.
Broader context for payment network oversight
Card networks have faced sustained regulatory scrutiny across multiple jurisdictions over the past decade. Concerns have centred on interchange fee levels, network rules governing merchant acceptance, and the terms under which digital wallets and alternative payment methods operate alongside traditional card rails.
PayPal's digital wallet occupies a significant position in the UK and European payments landscape, offering consumers the ability to link bank accounts, cards, and other funding sources. How that wallet routes transactions, and the incentive structures that shape those routing decisions, sits at the heart of regulators' concerns around consumer choice and market openness.
No timeline for the FCA's investigation has been indicated, and no findings have been made public. Competition investigations of this nature can extend over a period of years before any formal conclusions or remedies are reached.
