UK FCA Investigates Mastercard, Visa, and PayPal Over Anti-Competitive Digital Wallet Practices

TLDR:

• The FCA is probing Mastercard, Visa, and PayPal under Chapter I of the Competition Act 1998 for restricted competition.
• Mastercard and Visa face the more serious Chapter II charges, which target the abuse of a dominant market position.
• The investigation was triggered by PayPal Holdings Inc’s public financial disclosures, not a formal external complaint.
• The FCA may issue a statement of objections, giving firms the right to respond before any final ruling is made.
  

The UK’s Financial Conduct Authority (FCA) is investigating Mastercard, Visa, and PayPal for suspected anti-competitive conduct.

The probe centers on the funding and usage of PayPal’s digital wallet. All three firms face scrutiny under Chapter I of the Competition Act 1998.

Mastercard and Visa face the more serious Chapter II allegations as well. The FCA confirmed it has reached no conclusions and is still gathering evidence at this stage.

FCA Opens Two-Track Investigation Into Payment Giants

The investigation operates on two separate legal tracks. Under Chapter I, all three companies are being examined for agreements or practices that restrict or distort competition in the UK. This track covers concerted conduct among businesses that may limit fair market competition.

Mastercard and Visa face additional scrutiny under Chapter II of the same act. This provision targets the abuse of a dominant market position.

It carries a higher legal bar, as it requires the regulator to establish structural market power on the part of the firms.

As noted by legal and regulatory analyst Bill Hughes, Mastercard and Visa are facing “the additional and more serious allegation of abusing a dominant market position.”

The Chapter II track suggests regulators believe the card networks may have used their structural power to undermine competition in digital payments.

The investigation was triggered by financial disclosures made by PayPal Holdings Inc. This means the matter surfaced through routine scrutiny of public financial filings rather than through a formal external complaint.

That origin is relevant because it shows the FCA is actively monitoring industry disclosures for competitive concerns.

Evidence-Gathering Phase and Next Steps

The FCA is currently in the evidence-gathering phase of the investigation. No infringement findings have been made yet, and no formal charges have been issued against any of the three firms at this time.

The regulator may proceed to issue a statement of objections if it forms a provisional view that the law has been broken.

That statement would represent its initial finding of an infringement. However, not every investigation results in a statement of objections being issued.

If the FCA does move forward with a statement of objections, each firm named would receive an opportunity to respond.

They would be allowed to submit written representations and make oral arguments before the FCA reaches any final decision. This process ensures the firms have a fair chance to contest the provisional findings.

The Competition Act 1998 also allows the Competition and Markets Authority to bring parallel cases. The FCA’s powers under this act are separate from those used in Financial Services and Markets Act 2000 enforcement. This distinction matters for how procedures and timelines unfold in practice.

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