Digital wallets and Big Tech put under the spotlight by regulators | Personal Finance | Finance
The benefits and potential risks of digital wallets are being put under the spotlight by regulators.
The Payments Systems Regulator (PSR) alongside the Financial Conduct Authority (FCA) are canvassing opinions on how digital wallets affect individuals and businesses.
With a surge in the use of digital wallets in recent years, regulators suggest that over half of UK adults may now be using them.
They note that with the prevalence of Apple Pay, Google Pay, and PayPal, digital wallets have become a crucial interface between major tech companies and British consumers.
The authorities are keen to delve into the advantages digital wallets offer users; they’re questioning if there are aspects that could hinder payment efficiency and whether these wallets pose any substantial issues related to competition, consumer protection, or market integrity.
The PSR is particularly focused on how digital wallets influence consumer choice when it comes to payment methods at the point of sale.
Given its regulatory scope, the FCA is especially interested in how digital wallets might affect the competitive landscape of financial services and the operational robustness of the UK’s financial sector.
David Geale, the PSR’s managing director, commented: “Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too.
“Collaboration between regulators and working with industry is crucial to ensure we’re on the front foot to support innovation and competition, making sure everyone benefits from access, protection and choice in payments.
“We look forward to hearing views and evidence from a wide range of stakeholders throughout this process.”
Nikhil Rathi, the FCA’s chief executive, remarked: “The UK is seeing a seismic shift in how people pay, as digital wallets become a part of everyday life for many people.”
“We want to make sure we can maximise the opportunities and benefits for consumers and businesses while protecting against any risks this technology may present.”
The call for information remains open until 5pm on September 13, with the regulators keen to hear from various parties including technology providers, service users, and others with an interest in digital wallets.
Post-consultation, the regulators will take into account the feedback received and aim to provide an update by the first quarter of 2025.
