Mastercard, Visa, and PayPal under investigation in the UK
Key Points
- The FCA opened formal probes into Mastercard, Visa, and PayPal under the Competition Act 1998.
- The investigation focuses on the funding and usage of PayPal's digital wallet in the UK.
- Mastercard and Visa face additional scrutiny under Chapter II for suspected abuse of market dominance.
- The regulator confirmed the action after PayPal disclosed it in US securities filings.
- The FCA has made no findings and continues to gather evidence.
The Financial Conduct Authority (FCA) has opened formal probes into Mastercard, Visa, and PayPal over suspected anti-competitive conduct linked to PayPal’s digital wallet in the UK.
The regulator confirmed the action after PayPal disclosed the matter in its quarterly filing with the US Securities and Exchange Commission.
The FCA is examining Mastercard, PayPal, and Visa under Chapter I of the Competition Act 1998, which prohibits agreements and concerted practices that prevent, restrict, or distort competition.
The regulator is also examining Mastercard and Visa under Chapter II of the same Act, which targets conduct that amounts to abuse of a dominant market position.
The FCA has reached no conclusions and made no findings on whether competition law has been broken.
The regulator stated in its press release that it is currently gathering evidence and may proceed to issue a statement of objections setting out a provisional view, although not every case reaches that stage.
What the investigation covers
The probe focuses on how PayPal’s digital wallet draws funds and processes payments in the UK.
PayPal wallets typically pull money from linked debit cards, credit cards, or bank accounts when users pay merchants or send funds, and Mastercard and Visa sit behind the vast majority of UK card funding flows.
Any arrangements between the card schemes and PayPal that influence fees, card routing, or merchant choice could fall within the scope of the enquiries.
Mastercard and Visa together hold an effective duopoly over UK card networks, which makes them frequent targets of competition scrutiny.
PayPal counts millions of UK consumer accounts and integrates with thousands of online checkouts. The combination places the three firms at the centre of how UK shoppers move money online.
Why this matters for UK consumers
UK shoppers feel the effects of card and wallet fee structures indirectly through prices at the checkout.
Retailers pass on interchange and scheme fees in product pricing, particularly in lower margin sectors such as groceries, fuel, and online marketplaces.
If the FCA finds that funding arrangements distorted competition, eventual remedies could lower the costs that flow through to UK consumers.
Beyond pricing, the case touches consumer choice. Digital wallets now serve as the default checkout option for a growing share of UK online retail, and the conditions under which they connect to card networks shape which products and providers reach shoppers.
A narrowing of those conditions could raise barriers for newer wallet entrants and limit the alternatives at the point of sale.
The FCA said it will continue gathering evidence before deciding whether to issue a statement of objections.
If the regulator does proceed, the named firms will receive an opportunity to make written and oral representations before any final decision on whether the firms broke the law.
The Competition and Markets Authority can also bring cases under the same Act and has run several recent probes into UK payments.
