FCA Investigates PayPal, Visa And Mastercard Over Digital Wallet Competition
Britain’s Financial Conduct Authority has launched an investigation into PayPal, Mastercard and Visa over suspected anti-competitive conduct linked to PayPal’s digital wallet operations.
The regulator said on Wednesday that the inquiry focuses on contractual agreements involving the funding and usage of PayPal’s digital wallet services.
The move marks a rare use of the FCA’s powers to enforce competition law within the financial services sector. However, the regulator stressed that it has not yet reached any conclusions about whether UK competition rules have been breached.
The investigation became public after PayPal disclosed in a regulatory filing that it had received notices from the FCA in March, along with requests for information concerning its agreements with Mastercard and Visa.
Payment Companies Cooperating With Inquiry
All three companies said they are cooperating fully with the regulator’s investigation.
Mastercard confirmed it had received an information notice from the FCA seeking details about its contractual relationship with PayPal.
A Mastercard spokesperson said the company aims to meet the highest standards of competition law and would cooperate transparently with the inquiry.
Visa also acknowledged the investigation, stating that the FCA had informed the company about concerns relating to contractual provisions tied to the PayPal digital wallet.
The company declined to provide further details because the investigation remains ongoing.
PayPal similarly confirmed it was cooperating with the regulator but did not comment further on the matter.
Digital Wallet Usage Expands Rapidly In Britain
The investigation comes as digital wallet usage continues to grow sharply across the UK payments sector.
According to figures released last year by the FCA and the Payment Systems Regulator, the share of card transactions conducted through digital wallets rose to 29% from just 8% in 2023.
The two watchdogs said in a joint statement issued in February 2025 that market participants had raised concerns about competition within the digital wallet sector.
Industry groups and businesses argued that stronger competition could encourage innovation and create opportunities for new entrants in the payments market.
The FCA’s investigation follows a broader review conducted alongside the Payment Systems Regulator into the digital wallet ecosystem.
That report identified several potential competition concerns and shared its findings with the Competition and Markets Authority to avoid overlapping investigations.
Wider Scrutiny Of Digital Wallet Providers
The UK’s Competition and Markets Authority has already launched a separate investigation into the mobile ecosystems of Apple and Google, including their digital wallet services.
The inquiry, announced in January 2025, focuses on the dominance of the two technology companies in mobile payments and app distribution.
In February, the CMA said it had secured commitments from Apple and Google aimed at improving fairness in app store processes and increasing interoperability between platforms and payment systems.
The competition watchdog did not immediately comment on the FCA’s latest investigation involving PayPal, Mastercard and Visa.
The case adds to growing regulatory scrutiny of digital payment systems as authorities across Europe and the UK seek to encourage greater competition in financial technology markets.
With inputs from Reuters
