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The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have jointly issued a statement acknowledging the significant increase in the use of digital wallets over the past few years.
The report indicates that digital wallet transactions as a proportion of card payments have surged from 8% in 2019 to 29% in 2023, reflecting the technology’s rapid adoption.
The assessment by the FCA and PSR reveals that consumers have experienced considerable advantages due to this growth, such as enhanced convenience, improved security features, and for some, greater financial inclusion. However, the statement also points out areas of concern, particularly the need for improvements that would foster competition among digital wallet providers and facilitate market entry for new contenders.
In response to these competition concerns, the FCA and PSR have communicated their findings to the Competition and Markets Authority (CMA), which is currently examining the practices of the two dominant digital wallet providers, Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL), particularly concerning their mobile ecosystems.
Furthermore, the FCA and PSR plan to collaborate with the Treasury in reviewing the Payment Services and Electronic Money Regulations. The aim is to ensure that the regulatory framework remains robust and adaptable to future developments in the payments industry.
The authorities have committed to continuing their support for digital advancements that offer consumer benefits. This includes ongoing initiatives to promote open banking and contactless payment options, which are expected to stimulate competition and contribute to the UK’s economic growth and competitiveness.
These efforts are in line with the National Payments Vision, which envisages a modern, resilient, and innovative payment system that meets the changing needs of consumers and businesses.
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