The UK’s Financial Conduct Authority (FCA) has launched an
investigation into PayPal, Visa, and Mastercard over concerns that digital
wallet arrangements may restrict competition.

The probe, for instance, focuses on how PayPal’s
wallet is funded and used, placing one of the most widely used online payment
systems under regulatory review.

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Probe Targets Wallet Agreements

The FCA said it is investigating Mastercard, PayPal, and
Visa under Chapter I of the Competition Act 1998. It is also examining
Mastercard and Visa under Chapter II of the same law. The regulator suspects
that certain agreements linked to PayPal’s digital wallet could limit
competition in the UK.

The regulator’s investigation puts a spotlight on the same card and wallet rails that many UK‑facing
FX and CFD brokers use for client funding. For now, it does not change how
traders deposit, but it signals that regulators are looking more closely at the
commercial terms behind these “everyday” rails and whether they could distort choice or pricing for
payments into trading accounts.

PayPal confirmed the development in its financial report.
The company said it received notices of investigation and requests for
information from the FCA in March 2026. The requests relate to contractual
terms between PayPal and the two card networks.

“In March 2026, we received notices of investigations and
related requests for information from the U.K. Financial Conduct Authority
(“FCA”) under the Competition Act 1998 regarding certain provisions in PayPal’s
contractual agreements with Visa and Mastercard relating to funding and use of
the PayPal digital wallet. We are cooperating with the FCA in connection with
these investigations.”

The FCA has not reached any conclusions and has not found
any breach of competition law. The investigation remains ongoing as the
regulator gathers evidence.

No Findings at Early Stage

Under the Competition Act 1998, Chapter I prohibits
agreements that prevent, restrict, or distort competition. Chapter II bans the
abuse of a dominant market position. The FCA can issue a statement of
objections if it finds potential violations. Companies would then have a chance
to respond before a final decision.

Continue reading: FCA Wants to Prove London’s Markets Are More Liquid Than Many Think

The FCA conducts these investigations separately from its
broader financial supervision under the Financial Services and Markets Act
2000. The Competition and Markets Authority can also bring cases under the same
law.

The outcome of the probe remains uncertain, but it signals
closer scrutiny of digital payment systems and the role of major card networks
in shaping market access.

Many major FCA‑authorized brokers already sit on
this stack: IG, CMC Markets, Pepperstone, Plus500 and others support Visa and
Mastercard cards, and in several cases PayPal as a funding option alongside
bank transfers.

Payment Rails that Fund FX and CFD Accounts

Public funding pages show, for
example, that IG offers deposits via Visa or Mastercard and PayPal, CMC Markets
accepts Visa or Mastercard and in some regions PayPal. Pepperstone and
Plus500 also enable funding through Visa, Mastercard and PayPal in addition to
bank transfers.

Notably, several regulators have already moved against, or closely
scrutinized, the same payments firms, mainly on competition and access‑to‑services
grounds.

In the US, the Federal Trade Commission recently sent
formal warning letters to Visa, Mastercard, PayPal and Stripe, telling them not
to “debank” or deny services to customers based on political or religious views. It also warned that such conduct could trigger investigations and enforcement
under Section 5 of the FTC Act.

Last year, Visa and Mastercard agreed to a revised 38-billion-dollar settlement with US merchants in a two‑decade swipe‑fee antitrust case, offering to cut average
credit card fees by 0.1 percentage point for five years and cap some consumer
rates, even as major retail groups argued the deal still left businesses paying
too much to accept card payments.

This article was written by Jared Kirui at www.financemagnates.com.

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