On 19 February 2025, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) published a feedback statement, FS25/1, on big tech and digital wallets.

Background

The FCA and PSR published a call for information in July 2024 on the benefits and risks that digital wallets bring to people and businesses. This was part of the regulators’ work to assess the potential impact of the growth of digital wallets, in light of their increasing popularity in the UK.

Joint feedback statement

In FS25/1, the FCA and the PSR explain that it is clear from the feedback they received that there is plenty of opportunity in the growth of digital wallets, with some challenges and risks which are already being considered in other jurisdictions such as the EU and the United States.

The report sets out the findings from the regulators’ engagement with industry so that they can be taken into account by the Competition and Markets Authority (CMA) under the Digital Markets, Competition and Consumers Act. The report also highlights some of the opportunities that could be achieved through broader adoption of other digital technologies such as authentication and verification services emerging from the UK Digital Identity and Attributes Trust Framework and the launch of a GOV.UK digital wallet, or introduction of a digital pound.

Key points flagged in the report include:

  • Digital wallets represent a significant opportunity for innovation and growth.
  • Digital wallets could present a significant opportunity for non-card forms of payment as they become available, particularly for retail transactions.
  • However, stakeholder responses have raised potential competition, consumer protection and operational resilience issues.

Next steps

The FCA and PSR plan to work closely with the CMA in relation to issues around competition between digital wallets, and have shared their findings with the CMA in order to avoid regulatory duplication.

The FCA and PSR also intend to engage with HM Treasury as part of their review of the Payment Services and Electronic Money Regulations to ensure the regulatory framework is future-proof.

Finally, the FCA and PSR note that they will continue to embrace digital improvements that benefit consumers, including progressing work on open banking and contactless payments to boost competition and enhance the UK’s growth and competitiveness.