The use of digital wallets has rapidly grown in recent years with the proportion of card transactions using a digital wallet increasing significantly from 8% in 2019 to 29% in 2023.
Given the growth, the FCA and PSR engaged extensively with businesses and representative groups to assess the impact of digital wallets, finding significant benefits to consumers through greater convenience, enhanced security measures, and, for some, greater financial inclusion.
We also heard concerns, including improvements needed to enable competition among digital wallet providers and allowing new players to enter the market, bolstering innovation. In turn, this could expand the range of alternative payment methods on offer, giving consumers more choice.
We undertook the work to assess the potential impact of the growth of digital wallets. On the competition concerns heard, to avoid regulatory duplication, we have shared our findings with the Competition and Markets Authority (CMA). The CMA is currently investigating the two largest digital wallet providers, Apple and Google, in respect of their mobile ecosystems.
We will also engage with the Treasury as part of our review of the Payment Services and Electronic Money Regulations to ensure the regulatory framework is future-proof.
We will continue to embrace digital improvements that benefit consumers. This includes progressing work on open banking and contactless payments to boost competition and enhance the UK’s growth and competitiveness. These efforts align with the National Payments Vision of a modern, resilient, and innovative payments landscape that supports the evolving needs of consumers and businesses.