UK Suspects Big Tech’s E-Wallets Activities
On July 16th, UK regulators announced that they would be investigating the rapidly growing use of Big Tech’s e-wallet payment systems.
Everyone Is Mad at Big Tech
This investigation is the latest in a series of them in both Europe and the US. Regulators and lawmakers in both regions are increasingly scrutinizing Big Tech‘s involvement in financial services. Last year, for example, the Consumer Financial Protection Bureau (CFPB) proposed regulating payments and smartphone wallets, a move that faced industry backlash.
Not Out of the Woods Yet
It so happens that the EU has decided to not fine Apple after the company agreed to open its tap-and-pay technology to other providers for a decade. Apple’s European customers can then use alternative e-wallet payment systems, potentially benefiting competitors like Google Pay and Samsung Pay.
Points of Contentions
In their review, the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) found that more than half of UK adults now use digital wallets, primarily for everyday spending. Digital wallets accounted for approximately 14% of point-of-sale terminal transactions and 38% of e-commerce transactions by value last year.
The FCA and PSR are looking into services such as Apple Pay, Google Pay, and PayPal. There are three main points of interest:
- Are there competitors?
- Is there consumer protection?
- Do these e-wallet payment systems constitute a risk to the integrity of the market?
The FCA and PSR are seeking input on the benefits and risks of Big Tech’s digital wallets, assessing the impact they have on payment options and market competition at the checkout.
Digital wallets are now a major point of contact for consumers and Big Tech, the regulators noted. “Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too,” stated David Geale, managing director of PSR, in a statement.
Nikhil Rathi, the CEO of FCA, referred to the emergence of e-wallet payment systems as a “seismic shift” in payment methods. He also emphasized how critical it is to take advantage of all available opportunities while taking precautions against any hazards.
The British regulators’ current review expands on earlier research on contactless mobile payments and Big Tech’s role in financial services. They are also expecting feedback from the industry participants. The plan is to publish their findings on Big Tech and e-wallet payment systems by the first quarter of 2025.
The UK regulators will share their findings with the Competition and Markets Authority. There’s also a particular interest in how digital wallets might support the promotion of account-to-account payments by banks, offering an alternative to card networks like Visa and Mastercard.
Inside Telecom provides you with an extensive list of content covering all aspects of the tech industry. Keep an eye on our Fintech sections to stay informed and up-to-date with our daily articles.