In a statement, the regulator confirmed it is investigating all three firms under Chapter I of the Competition Act 1998, which prohibits agreements, concerted practices and decisions that may prevent, restrict or distort competition within the UK. Mastercard and Visa are additionally being scrutinised under Chapter II of the same Act, which targets conduct amounting to the abuse of a dominant market position.

The probe was confirmed after PayPal Holdings Inc disclosed the matter in a filing with the US Securities and Exchange Commission (SEC), prompting the FCA to issue its own statement. The watchdog stressed that it has reached no conclusions and made no findings regarding any breach of competition law at this stage, noting that it is currently in the evidence-gathering phase.

PayPal said in its SEC filing that it is cooperating with the FCA, a position echoed by Visa. A Mastercard spokesperson said: “Mastercard works to ensure we meet the highest standards of competition law and will be cooperating fully and transparently with the FCA.”

Should the investigation progress, the FCA may issue a statement of objections setting out its provisional view that an infringement has occurred. Recipients would then be given the opportunity to make written and oral representations before any final decision is reached. Not every case, the FCA noted, results in such a statement being issued.