The investigation is to determine whether the three companies engaged in “anti-competitive conduct linked to the funding and usage of PayPal’s digital wallet,” the Financial Conduct Authority (FCA) said in a Wednesday (May 6) press release.
According to the FCA, the probe centers around possible violations of the U.K.’s 1998 Competition Act, including a section prohibiting “conduct which amounts to the abuse of a dominant position in a market, and which may affect trade within the UK.”
However, the authority said it had not reached a conclusion of whether any laws had been violated, and that not all investigations proceed beyond this initial phase.
PayPal had acknowledged the investigation in a regulatory filing Tuesday (May 5). The company told PYMNTS it was cooperating with the FCA but declined to comment further, as the investigation is still pending.
A Visa spokesperson said the FCA had informed the company “that it has opened an inquiry into certain contractual provisions regarding the PayPal digital wallet,” and that Visa is “cooperating with the FCA in its inquiry.”
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Mastercard also confirmed that it had been notified of the investigation by the FCA when contacted by PYMNTS.
“Mastercard works to ensure we meet the highest standards of competition law and will be cooperating fully and transparently with the FCA,” a company spokesperson said.
The investigation comes as consumers turn to digital wallets for “budgeting help and access to installment plans” amid increasing financial strain, as PYMNTS wrote recently.
Research from PYMNTS Intelligence finds that payment choice is beginning to reflect household strain in a more direct way. Consumers feeling high financial stress are more than twice as likely as low-stress consumers to have turned to digital wallets for their most recent grocery purchase, at 21% versus 8%, and for their last retail purchase, at 28% versus 11%.
“That matters because digital wallets are no longer just about speed at checkout,” PYMNTS wrote. “For many consumers, they are becoming a tool for managing cash flow, tracking spending and tapping installment credit at the moment of purchase.”
Visa was sued in 2024 by the U.S. Justice Department, whose antitrust suit accused the company of suppressing competition in the debit card market and stifling alternatives. Visa responded by calling the claim “meritless.”
