The Payments Systems Regulator (PSR) and the Financial Conduct Authority (FCA) have jointly initiated a call for information to assess the rapidly growing influence of digital wallets on both consumers and businesses in the UK.
As digital wallets like Apple Pay, Google Pay, and PayPal become ubiquitous, accounting for significant interactions between major technology companies and British consumers, understanding their benefits and risks is becoming crucial.
Recent data suggests that more than half of UK adults are now using digital wallets, indicating their central role in everyday financial transactions. This surge in usage presents numerous opportunities but also necessitates a careful examination of potential drawbacks and the functionality of these payment tools.
The PSR and FCA are focusing on several key areas: the advantages digital wallets offer to users, potential payment functionality issues, their role in enhancing direct account-to-account transactions, and the implications for competition among payment systems. Moreover, the regulators are exploring the broader impact of these technologies, including any significant concerns related to competition, consumer protection, or market integrity.
David Geale, Managing Director of the PSR, highlighted the importance of regulatory and industry collaboration to stay ahead in supporting innovation and competition within the payments sector.
He said, “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.”
Echoing this sentiment, Nikhil Rathi, Chief Executive of the FCA, noted, “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.”
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