UK FCA Regulatory Brief

Headline

FCA opens Competition Act 1998 investigations into Mastercard, PayPal, and Visa over digital wallet conduct

Executive Summary

The FCA confirmed on May 6, 2026 that it is investigating Mastercard, PayPal, and Visa under Chapter I of the Competition Act 1998, and Mastercard and Visa under Chapter II, for suspected anti-competitive conduct linked to the funding and usage of PayPal's digital wallet. The FCA is currently in the evidence-gathering phase and has reached no conclusions on whether competition law has been breached.

Key Regulatory Signals

• Chapter I Exposure: All three firms face investigation under the Chapter I prohibition, which targets agreements, concerted practices, and decisions that prevent, restrict, or distort competition in the UK.
• Chapter II Exposure: Mastercard and Visa face the additional Chapter II prohibition, which targets abuse of a dominant market position. This dual-track exposure carries higher structural risk for those two firms.
• Procedural Stage: The FCA is gathering evidence. A statement of objections, representing a provisional infringement finding, may follow but is not guaranteed. Addressees would receive written and oral representation rights before any final decision.
• Parallel CMA Jurisdiction: The FCA's CA98 powers operate independently of its FSMA 2000 enforcement powers. The Competition and Markets Authority retains concurrent jurisdiction to bring its own CA98 cases on the same conduct.
• Trigger Event: The FCA confirmed the investigation following publication of financial reporting by PayPal Holdings Inc, indicating the disclosure created the evidentiary basis for public confirmation.

Regulatory Delta

The FCA holds concurrent competition powers with the CMA under the Competition Act 1998, granted under the Financial Services (Banking Reform) Act 2013, but its use of those powers against major card network operators and a global digital wallet provider at this scale is uncommon. The dual-track structure — Chapter I for all three firms and Chapter II exclusively for Mastercard and Visa — signals that the FCA is pursuing both a coordination theory and a dominance theory simultaneously, which broadens the potential remedial scope beyond a single infringement type. The investigation follows the FCA's broader scrutiny of card payment markets, including its 2023 and 2024 work on merchant card fees and the Payment Systems Regulator's concurrent oversight of scheme and processing fees under the Financial Services (Banking Reform) Act 2013. No prior FCA CA98 investigation has publicly named this combination of a card network duopoly and a major digital wallet operator as co-respondents on linked conduct.

Materiality Classification

High — The FCA is currently in the evidence-gathering phase and has reached no conclusions on whether competition law has been breached.

Time Horizon

Immediate — Material regulatory development with active compliance, supervisory, or operational implications; institutions should assess exposure and prepare for follow-on guidance without delay.

Intelligence Outlook

Monitor the FCA's CA98 investigation page and the Payment Systems Regulator for any statement of objections, CMA coordination announcement, or parallel PSR action directed at Mastercard, PayPal, or Visa on related payment system conduct.