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The benefits and potential risks of digital wallets are being put under the spotlight by regulators.
The Payments Systems Regulator (PSR) and the Financial Conduct Authority (FCA) are seeking views on the impacts of digital wallets for people and businesses.
The use of digital wallets has grown rapidly over the last few years, and it is likely that more than half of UK adults now use one, the regulators said.
They added that, with Apple Pay, Google Pay and PayPal being three of the most widely used digital wallets in the UK, digital wallets have become an increasingly important touchpoint between Big Tech firms and UK consumers.
The regulators want to understand more about the range of benefits that digital wallets bring for service users; whether there are any features that mean payments do not work as well as they could; and whether digital wallets could raise any significant competition, consumer protection or market integrity issues.
The UK is seeing a seismic shift in how people pay— Nikhil Rathi, FCA
The PSR is particularly interested in understanding how digital wallets impact consumers’ choice of payment options at checkout.
The FCA’s regulatory remit gives it a particular interest in issues such as how digital wallets may impact competition in the supply of financial services and the operational resilience of the UK financial services sector.
David Geale, the PSR’s managing director, said: “Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too.
“Collaboration between regulators and working with industry is crucial to ensure we’re on the front foot to support innovation and competition, making sure everyone benefits from access, protection and choice in payments.
“We look forward to hearing views and evidence from a wide range of stakeholders throughout this process.”
Nikhil Rathi, the FCA’s chief executive, said: “The UK is seeing a seismic shift in how people pay, as digital wallets become a part of everyday life for many people.
“We want to make sure we can maximise the opportunities and benefits for consumers and businesses while protecting against any risks this technology may present.”
The call for information is open until 5pm on September 13 and the regulators would like to hear from those including technology providers, service users and other parties with an interest in digital wallets.
The regulators will consider feedback and provide an update by the first quarter of 2025.
