Amid growing concerns regarding the dominance of Big Tech in the digital wallet space, UK financial regulators have announced their intention to support the Competition and Markets Authority (CMA) in its broader investigations into the mobile ecosystems of Apple and Google.
Last month, the CMA launched investigations to determine whether Apple and Google hold strategic market status in their mobile ecosystems, which encompass operating systems, app stores, and mobile browsers. As part of this inquiry, the CMA will evaluate the operations of the two tech giants concerning their mobile wallets.
In parallel, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) are conducting their own assessments of Big Tech’s influence in the digital wallet sector.
Recent statistics show that the percentage of card transactions made using digital wallets rose from 8% in 2019 to 29% in 2023, with an even higher prevalence at in-store terminals. In 2023, around 20% of card users relied on digital wallets for over half of their card transactions, while approximately 10% used them for more than 75% of their transactions.
Following a Call for Information issued in July, the FCA and PSR have published feedback that highlights several key concerns raised by stakeholders. These concerns include Apple’s longstanding restrictions on access to NFC technology, which critics argue enables both Apple and Google to maintain control over their mobile ecosystems. This control allows them to direct consumers toward their own digital wallets through pre-installation tactics.
Stakeholders also pointed out a lack of competition among the payment systems available within these wallets, noting that the main pass-through wallets currently provide limited options beyond traditional card payments. This constraint hinders the potential for a wider range of payment methods, such as account-to-account payments, stablecoins, or future central bank digital currencies (CBDCs).
In a communication to the CMA, the FCA and PSR acknowledged the competitive issues identified by stakeholders and emphasized that these concerns are closely linked to the CMA’s work on mobile ecosystems. While the regulators have not reached any formal conclusions yet, they recognize that the identified competition issues warrant further investigation.
They stated, “We have carefully considered using the FCA and/or PSR’s powers to investigate these concerns. However, we believe the CMA, under the Digital Markets, Competition and Consumers Bill Act, is best positioned to conduct this investigation and, if necessary, impose conduct requirements.”
Additionally, the FCA and PSR have indicated their intent to collaborate with HM Treasury on issues related to operational resilience and consumer rights and protections that emerged from the feedback received.