The Financial Conduct Authority (FCA) has launched a rare investigation into PayPal, Mastercard, and Visa for alleged anti-competitive conduct related to the funding and usage of PayPal’s digital wallet. This move by the UK financial regulator, which infrequently employs its powers to enforce competition law among financial services firms, marks a significant development in the oversight of digital payment systems. The FCA stated on Wednesday that it has not yet drawn any conclusions regarding potential breaches of UK competition law.
The announcement followed a filing from PayPal indicating it had received notices in March regarding investigations and information requests from the FCA concerning its contractual agreements with the two major card networks. All three payments companies have confirmed their cooperation with the regulator. PayPal operates a global digital payments platform that enables individuals and businesses to send and receive money securely. Its digital wallet facilitates online transactions and various financial services. A Mastercard spokesperson affirmed the company’s commitment to meeting competition law standards, while Visa noted its participation in the inquiry.
This inquiry surfaces amidst a notable surge in digital wallet adoption across Britain, with the proportion of card transactions utilising digital wallets jumping from 8% to 29% in 2023. The investigation also follows earlier reports by the FCA and the Payment Systems Regulator (PSR) that highlighted competition concerns within the digital wallet sector. These concerns were subsequently shared with Britain’s antitrust watchdog, the Competition and Markets Authority (CMA), which itself launched a separate inquiry into Apple and Google’s mobile ecosystems, including their digital wallets, in January 2025. The CMA recently secured commitments from these tech giants to enhance fairness and interoperability within their app store processes.
