The UK’s Financial Conduct Authority is investigating PayPal, Mastercard and Visa for alleged anti-competitive conduct related to the funding and usage of PayPal’s digital wallet, the regulator said, in a rare exercise of its competition powers.

The financial regulator said it had reached no conclusions about whether the firms had broken competition law.

The investigation relates to potential breaches of the UK Competition Act 1998, which prohibits practices that may distort competition or trade.

Mastercard and Visa are also being investigated for potentially breaching rules that bar the abuse of a dominant market position, the FCA said.

PayPal earlier issued a filing indicating it had received notices from the FCA in March relating to an investigation, and related requests for information regarding its contractual agreements with the credit card companies.

Mastercard confirmed in a statement that it had received an FCA information notice and a request for details of its contractual agreement with PayPal.

It said it works to meet the “highest standards of competition law”.

Visa made a similar comment. PayPal said it could not comment on an ongoing investigation. All three companies said they were cooperating with the regulator.

The FCA and the Payment Systems Regulator said in 2025 the proportion of card transactions involving a digital wallet had jumped to 29 percent from only 8 percent two years earlier.

The two regulators said in February of last year they had received calls for improved competition among digital wallet providers to allow the entry of new players and to boost innovation.

They conducted a study into digital wallets last year that raised competition concerns that were shared with the Competition and Markets Authority.

The CMA began a separate inquiry into Apple and Google’s mobile operating systems, including their digital wallets, in January 2025, and in February the regulator said the companies had agreed to improve fairness in app store processes and to improve interoperability.

The EU has also worked with mobile operating system providers to improve digital wallet competition.