The Payments Systems Regulator (PSR) and Financial Conduct Authority (FCA) are seeking views on the benefits and risks digital wallets bring to people and businesses. As digital wallets gain popularity in the UK, these regulatory bodies aim to understand their impact on consumer behavior and business operations.

Digital Wallets Transform UK Payments

The use of digital wallets has increased rapidly over the past few years. It is likely that more than half of UK adults now use one. Apple Pay, Google Pay, and PayPal are three of the most widely used digital wallets in the UK today. These digital wallets have become an important connection between big tech firms and UK consumers.

David Geale, the PSR’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.”

“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.”

Future of Digital Wallet Regulation

Regulators are investigating several areas. First, they want to identify the benefits that digital wallets bring to users. Second, they aim to uncover any features that may cause payments to not work well for consumers or businesses.

Another focus is the role of digital wallets in enabling account-to-account payments and their impact on competition between payment systems. Lastly, regulators are concerned about potential competition, consumer protection, or market integrity issues that digital wallets might raise, now or in the future. Regulators will analyze all responses received and provide an update by the first quarter of 2025.

Nikhil Rathi, the FCA’s Chief Executive, said: “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.”