PayPal, Mastercard and Visa are facing an investigation by the Financial Conduct Authority over potential anti-competitive practices linked to the funding and use of PayPal’s digital wallet.
The FCA said it has not reached any conclusions on whether UK competition law has been breached, describing the probe as an early-stage investigation. The regulator rarely exercises its competition enforcement powers in the financial services sector, making the move particularly notable.
The investigation follows disclosures from PayPal that it received formal notices and information requests from the FCA regarding contractual agreements with Mastercard and Visa.
All three companies said they are cooperating with the inquiry. Mastercard stated it would work “fully and transparently” with the regulator, while Visa confirmed the probe relates to contractual provisions tied to the PayPal wallet. PayPal said it could not comment further while the investigation remains ongoing.
The scrutiny comes as digital wallet usage continues to rise rapidly in the UK. According to the FCA and the Payment Systems Regulator, the share of card transactions using digital wallets increased from 8% in 2023 to 29% last year.
Regulators have also signalled concerns about competition in the sector, saying they have heard calls for a more open market that would allow new wallet providers to compete and encourage greater innovation in digital payments.