UK Regulators Launch Inquiry into Apple, Google’s Digital Wallets

The UK’s Payment Systems Regulator (PSR) and Financial Conduct Authority (FCA) have launched an investigation into the competitiveness of digital wallets offered by tech giants like Apple, Google, and PayPal (via Bloomberg).

The investigation covers a range of topics, from the fees charged by wallet providers to the potential consequences of an operational failure by a digital wallet service.

Nikhil Rathi, the Chief Executive Officer of the FCA, emphasized the dual goals of this initiative: “We want to make sure we can maximize the opportunities and benefits for consumers and businesses while protecting against any risks this technology may present.”

This investigation follows a recent decision by European Union regulators, who opted not to impose fines on Apple after the company agreed to allow other providers access to its tap-and-pay technology free of charge for a decade.

This EU settlement is expected to benefit competitors like PayPal, Google Pay, and Samsung Pay, enhancing their ability to offer payment services to Apple’s European customers.

The PSR and FCA have pledged to share the insights gathered with the UK’s Competition and Markets Authority (CMA). One key area of interest is how digital wallets could facilitate account-to-account payments, enabling consumers to make direct payments from their bank accounts without using card networks such as Visa and Mastercard.

According to the joint paper released by the regulators, it is estimated that over half of UK adults use digital wallets to some extent.

David Geale, the managing director of the PSR, noted, “Digital wallets are steadily becoming a go-to payment type. While this presents exciting opportunities, there might be risks too.”

Last year, digital wallets accounted for approximately 14% of point-of-sale terminal transactions and 38% of e-commerce transactions by value.

Industry participants have until September 13 to respond to the regulators’ call for information.