City watchdog probes Mastercard, Visa, Paypal for alleged anti-competitive conduct
The City watchdog has confirmed it is investigating a trio of payments giants over alleged anti-competitive conduct.
The Financial Conduct Authority (FCA) will probe Mastercard, Paypal and Visa under the Competition Act 1998 regarding its suspected conduct related to the “funding and usage” of Paypal’s digital wallet.
Paypal’s digital wallet is an app-based system that stores payment methods – such as specific branded cards like Mastercard and Visa – to enable online, in-store contactless, and app-based payments.
The legislation prohibits agreements, practices and conduct that may damage competition in the UK.
All three companies are facing a probe under Chapter I of the act, which prohibits agreements that could prevent, restrict or distort competition within the UK.
Mastercard and Visa are also being investigated under Chapter II, which concerns the abuse of a dominant position in a market that may affect trade within the UK.
Mastercard and Visa under UK watchdog’s microscope
It marks another round of regulatory scrutiny for the two payment giants in the UK. In December, the pair – along with Revolut – lost a legal battle against the UK’s payments watchdog amid plans to introduce a cap on card fees for overseas transactions.
The ruling followed a review of fees last March, when the PSR issued a scathing statement about Visa and Mastercard.
The regulator said that the firms have raised core scheme processing fees by 25 per cent since 2017, costing UK businesses an extra £170m a year. These hikes had piled pressure on businesses, forcing them to absorb additional costs or pass them on to customers, the PSR said.
A spokesperson for Mastercard said: “We can confirm that we’ve received an information notice from the FCA requesting details of our contractual relationship with PayPal. Mastercard works to ensure we meet the highest standards of competition law and will be cooperating fully and transparently with the FCA.
”A spokesperson for Paypal said: “PayPal is cooperating with the FCA. As this is a pending investigation, we cannot comment further at this time.”
A spokesperson for Visa said: “The UK Financial Conduct Authority (FCA) has informed Visa that it has opened an inquiry into certain contractual provisions regarding the PayPal digital wallet. Visa is cooperating with the FCA in its inquiry.”