FCA and PSR Call for Input on Big tech and digital wallets - Which? response

The usage of digital wallets is increasing, particularly among younger age groups. Consumers using them appear to value the range of benefits they offer when making payments e.g. speed, convenience, and protection. 

Different types of digital wallets (e.g. staged and pass-through) currently offer different levels of protection to consumers. This can be confusing to consumers. The potential to make other types of payments - with different protections - via a digital wallet would make this even more complex. 

We believe that digital wallets - and other emerging payment methods - should be brought into the regulatory perimeter. While we have not seen large amounts of consumer harm associated with digital wallets up to this point, their increasing popularity and uncertainty over the way they will develop in future means they should be subject to regulatory oversight. 

The Payment Systems Regulator (PSR) has made clear its desire to boost competition and give people and businesses more choice about how they make and accept payments by promoting account-to-account payments as an alternative to cards.  If regulators want to encourage adoption they should consider how account-to-account payments can be facilitated by digital wallets. However, before doing so it is imperative that appropriate payment protections are introduced.   

The increasing popularity of digital wallets reinforces the need to tackle issues relating to digital and financial exclusion.