Mobile wallet use projected to surge
About 2.8 billion mobile wallets were in use worldwide at the end of 2020, and the number is expected to jump 74% to 4.8 billion within five years, according to a recent forecast from global mobile-payment network provider Boku in conjunction with Juniper Research.
While mobile-wallet usage in North America is projected to grow nearly 50% from 2020 to 2025, adoption rates there and in Western Europe lag far behind China and other parts of the Asia-Pacific region. China-based AliPay and WeChat Pay are the dominant digital wallet companies, with projections for $2.35 trillion and $2.15 trillion in transactions processed by 2025, respectively, according to the 2021 Mobile Wallets Report released this month.
The mobile wallet universe is split between card-based wallets, common in North America and Western Europe, which benefited from a rise in contact-free payments during the COVID-19 pandemic, and stored-value wallets, popular in Asia and growing rapidly in emerging markets.
In much of the world, cash in hand is no longer king. In emerging markets, the penetration of smartphones means that consumers with smartphone digital wallet capabilities now outstrips those with bank accounts. That development has fostered mobile money growth among populations that had previously lacked access to sophisticated financial services.
As e-commerce activity unconnected to credit and debit cards becomes mainstream in Africa, the Middle East, and Latin America, mobile wallets, “will continue to be critical in supporting greater digital and financial inclusion,” according to the report released July 8.
This “unbanked” segment of mobile wallet users relies on a multitude of cash or cash equivalent methods to fund, store, and make payments.
Meanwhile, the number of mobile wallet platforms transacting more than $1 billion annually is expected to jump 27% by 2025 to 69 platforms. Opportunities for merchants are ballooning as consumers not only use wallets more, but use more wallets. In high growth markets like India and Indonesia, individual users rely on an average of 2.74 mobile wallets.
But many U.S. consumers remain less than dazzled by the added convenience of using card-based wallets like Apple Pay or Google Pay, which are essentially an extension of the card itself.
The tech value-add of not carrying around a physical card “provides merely incremental benefit,” Adam Lee, Boku’s chief product officer, said in a company statement. Stored value wallets have been bigger game-changers in places where access to credit cards is limited, or non-existent, and where bank account usage is low.
“Mobile wallets have lowered the barrier to making digital payments and in parallel ushered billions of new consumers into e-commerce,” Boku CEO Jon Prideaux, said in a statement.
“For global merchants, mobile payment acceptance is not about accepting one type of mobile wallet or another but ensuring that consumers in every market will have the required selection on payment types in order to monetize transactions,” he added.
The study projected that 4.87 billion digital wallets will be in use worldwide by 2025, up from 2.8 billion at end of last year. Nonetheless, if that projection holds true, North American customers will not be a significant source behind the surge. They will hold only 275 million of those digital wallets, or about six percent of the world total.
Source: Payments Dive