British regulators announced on Monday (15 July) that they were investigating competition and consumer protection concerns following the increased use of digital wallets offered by Big Tech companies.
A digital wallet, or mobile wallet, saves information from credit cards, debit cards, and other sources. Digital wallets allow users to make in-store payments quickly and easily, and anyone can use them at any merchant where digital payment is accepted.
The Financial Conduct Authority and Payments Systems Regulator said they will be looking into how digital wallets, including PayPal, Apple Pay and Google Pay, impact choice of payment and competition.
In a statement, the regulators claimed that digital wallets are now likely used by over half of UK adults and have become an increasingly important touchpoint between Big Tech companies and UK consumers.
David Geale, the Payment System Regulator’s managing director, said digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too.
The move comes after the US consumer watchdog faced an industry backlash earlier last year for calling for the supervision of companies offering payments and digital wallets. The Consumer Financial Protection Bureau said Big Tech’s digital wallets lacked the same consumer safeguards as traditional payment methods.
The lobby group representing Meta, Amazon, and X responded to the plan, stating that supervision could stifle innovation.
The use of mobile wallets increased as the Covid-19 pandemic resulted in greater acceptance of digital payments. In 2021, the global market value of mobile wallets was $55bn, an annual increase of 28.3%, according to research and analysis company GlobalData.
FIS’s Global Payments Report 2023 found digital wallet payments in the UK increased in-store as well as online, accounting for 10% of payments in 2022 and will account for a 21% market share by 2026.
GlobalData estimates the trend for increased mobile wallet payments will continue globally, significantly outpacing card payments by 2026.
Based on GlobalData’s Mobile Wallet Analytics, digital wallet use is most common in developing markets, with China alone making up 71% of all mobile wallet transactions by value across the world.
