FCA opens competition probe into Visa, Mastercard and PayPal over digital wallet practices

The UK’s financial regulator is investigating whether contractual arrangements between card schemes and digital wallet operators restrict competition, following a surge in wallet-based transactions.

The FCA has launched a formal investigation under the Competition Act 1998 into the conduct of Visa, Mastercard and PayPal in the digital wallet market. The probe focuses on whether agreements governing how card payments are processed through digital wallets such as Apple Pay and Google Pay limit the ability of rival payment methods to compete at the point of sale. Digital wallet usage in the UK jumped from 8% to 29% of card transactions by 2023, a pace of adoption that has outstripped regulatory oversight.

The investigation builds on joint market reviews by the FCA and the Payment Systems Regulator that flagged concentration concerns. With approximately 95% of UK card transactions running through Visa and Mastercard rails, regulators are now asking whether digital wallets have entrenched that dominance rather than challenged it. For account-to-account payment providers and open banking firms, the probe could eventually create space for alternative payment methods within wallet interfaces, though any structural remedies are likely years away.

The timing is notable given Treasury’s concurrent decision to fold the PSR into the FCA, consolidating payments competition oversight under a single authority.

Editorial note: This is the most significant UK competition action in payments this year — it directly addresses the structural question of whether digital wallets reinforce card scheme dominance or could be opened to alternative rails.

Sources: UK Financial Regulator Probes PayPal, Mastercard, Visa — Silicon UK | FCA probes Mastercard, Visa and PayPal over digital wallet conduct — MSN | Visa and Mastercard Captured the Digital Wallet — Talk Finance

Open Banking Limited appoints former FCA general counsel to board

OBL has added Sean Martin, previously general counsel at the FCA, as an independent non-executive director as the organisation navigates the transition toward open finance.

Open Banking Limited announced on May 8 that Sean Martin has joined its board. Martin served as general counsel at the Financial Conduct Authority, giving him direct experience of the regulatory architecture that governs open banking and will shape the open finance framework. The appointment comes as the FCA’s open finance roadmap and the government’s Smart Data Strategy both signal an expansion of mandated data sharing beyond payments accounts.

Whether this is a new board seat or a replacement for a departing director is not stated in the available sources. What is clear is that OBL is adding regulatory expertise at a moment when its future role is under active discussion. The organisation’s mandate was originally tied to the CMA’s retail banking order; as open finance broadens the scope, OBL’s governance and legitimacy need to keep pace with an expanding remit.

Editorial note: The appointment signals OBL’s need for regulatory credibility as it positions itself within the emerging open finance governance structure — the individual’s FCA background is directly relevant to OBL’s strategic challenges.

Sources: Open Banking Limited appoints former FCA general counsel to board — Finextra | Open Banking Adds Ex-FCA General Counsel To Board — Law360