UK Regulators Back CMA’s Probe into Digital Wallet Competition
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UK financial regulators have announced they will support the Competition and Markets Authority (CMA) in its broader investigation into Apple and Google’s dominance in the digital wallet market. Last month, the CMA began checking if Apple and Google have too much control over their mobile systems.
This includes their app stores, web browsers, and mobile wallets. As part of the investigation, the watchdog will examine the operations of the companies’ mobile wallets.
Regulators Address Digital Wallet Growth And Competition Concerns
The Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have also been looking into the growing role of Big Tech in the digital wallet space.
More people are using digital wallets to pay. In 2019, only 8% of card payments used them, but by 2023, this number grew to 29%. Many payments happen at stores. In 2023, about 20% of card users paid with a wallet more than half the time, while about 10% used one for most of their payments.
Following a Call for Information on the issue in July, the two regulators have now released the feedback, which highlights several concerns from stakeholders.
In addition to pointing out Apple’s long-standing restriction of access to its NFC technology, respondents noted that Apple and Google have the advantage of controlling their mobile ecosystems. This control allows them to direct consumers to use their own digital wallets through pre-installation.
Stakeholders also expressed concerns over the lack of competition between payment systems within the wallets, as most pass-through wallets currently only support cards. This limitation restricts the possibility for account-to-account payments, stablecoins, or future Central Bank Digital Currencies (CBDCs).
Regulators Emphasize Need For Further Investigation And Collaboration
In a letter to the CMA, the FCA and PSR stated that the competition issues raised by stakeholders are closely linked to the CMA’s mobile ecosystem investigation.
According to the FCA and PSR, they have not reached specific conclusions, thus, emphasizing that these issues need further review and investigation.
The regulators added that they have carefully considered using the FCA and/or PSR’s powers to investigate these concerns.
However, they think the Competition and Markets Authority is the best group to check this. The authority can use its powers under the Digital Markets, Competition, and Consumers Bill to look into the issue and, if needed, set rules for how Apple and Google should act.
On other concerns raised from the Call for Information, the FCA and PSR mentioned they will collaborate with the Treasury on issues related to operational resilience and consumer rights protection.
The Competition and Markets Authority (CMA) is the main competition regulator in the United Kingdom. It works as a part of the government but does not have a minister in charge. The group helps businesses play fair and stops unfair actions.
The Competition and Markets Authority was set up on 1 October 2013 but did not start working fully until 1 April 2014. It took over jobs from two old groups, the Competition Commission and the Office of Fair Trading, which were closed.
