When you checkout of an eCommerce site, there’s a very good chance you’ll have the option to pay using a digital wallet, for example Apple Pay, Google Pay or PayPal. Tap your phone or watch to make a contactless transaction and nobody bats an eyelid. Digital wallet adoption by both businesses and consumers has come a very long way.
Research by Discover Global Network1 found that in 2020, digital wallets accounted for 27% of in-store spending, 41% of eCommerce spending and 46% of mCommerce spending through a mobile smart device. By the end of 20202, around 2.8 billion digital wallets were in use worldwide and digital wallets had become the most widely used digital commerce payment method.
This global love for wallets is showing no signs of slowing, with the same research forecasting that global transaction volume of in-store and eCommerce digital wallet payments will exceed US$10 trillion by 2025.
“With growing demand for convenience and speed when shopping, it’s not surprising that consumers and businesses are choosing digital wallets as the preferred way to pay,” says James King, Head of eCommerce Consultancy at Elavon Europe. “Fewer abandoned checkouts, increased repeat business and a smoother overall experience, all evidence for why every business should offer these fast-evolving ways to pay to their customers.”
Digital wallets have the power to remove barriers to financial inclusion, enabling millions of consumers to unlock the benefits - lower costs, stronger security, greater convenience and improved social mobility - which come from access to electronic money transactions.
By the end of 2025, experts believe 4.87 billion digital wallets4 will be in use across the world. While growth is expected everywhere, the bulk of this will come from developing markets like Asia Pacific and China, where innovation is likely to happen outside of the developed payment scheme infrastructures.
In developed markets, wallets have largely digitised the existing card payment experience to improve convenience and add functionality. Debit and credit cards remain the heart of almost every transaction.
For younger demographics, this has still been enough to persuade them to switch their spend to wallets, with more than half of 18–34 year-olds6 using an app for mobile payments.
Older consumers remain to be convinced, with only one in ten of those aged 65+ choosing this payment method. As the makeup of our society shifts and the behaviours of younger generations become dominant, further displacement of cash by other payment types, including digital wallets, seems inevitable.
However, payments providers and businesses across Europe, Australia and North America would do well to keep an eye on what’s happening in less developed markets, as that’s where innovation appears to be blooming outside of the traditional ecosystems.
Wherever you operate and no matter who your customers are, digital wallets are here to stay and building them into your customer experience must be a critical part of your payments strategy.
Talk to us if you’d like to see what digital wallets can do for your business.