Based in the United Kingdom, Worldpay, a company specializing in the implementation of payment transaction processing activities, has published a report according to which there is currently an increase in the use of digital wallets at the global level.
The mentioned tendency has the largest scale in Asian countries. According to a Worldpay report, digital wallets accounted for 50% of all purchases in the e-commerce space last year. These technological solutions are also the fastest-growing payment method in the world.
The share of digital wallets in the structure of purchases in regular stores last year was fixed at around 30%. The total amount of financial operations performed in the e-commerce space and in standard trade networks belonging to the category of objects of physical presence using the specified payment method has reached $14 trillion. The Worldpay report predicts that by 2027 the mentioned figure will grow to $25 trillion.
Currently, in the context of international geographical segmentation, the highest level of use of digital wallets is demonstrated by residents of countries that are part of the Asia-Pacific region. At the same time, there is now a tendency to decrease the scale of applying physical credit cards and cash. To a certain extent, this is a natural process against the background of growing consumer interest in using digital wallets to make payments within various financial operations.
According to the information contained in the Worldpay report, last year in the Asia-Pacific region, 70% of all online payments were made within the framework of applying virtual wallets. Also in the respective countries, 50% of similar transactions in stores within the network of physical sales presence were related to the use of the specified payment method. It is worth noting that the mentioned indicators are the highest among the regions of the world.
Total spending for digital wallets in the Asia-Pacific region was fixed at around $10 trillion last year. It is worth noting that this result was achieved mainly due to the corresponding consumer activity in China. The mentioned amount of spending includes purchases on e-commerce platforms and point-of-sales trade (POS).
At the same time, in Europe last year, the share of digital wallets in the total structure of transactions made in the virtual commerce space was fixed at around 30%. In the total volume of payments in-store in the mentioned region for 2023, the same figure was only 13%.
In the United States, the share of digital wallets in the virtual sales sector reached 37% last year. In the total volume of physical spending in the mentioned country in 2023, the specified figure was 42%.
Phil Pomford, general manager for Worldpay’s e-commerce team in the Asia-Pacific region, said during a conversation with media representatives that, in addition to convenience, biometric technology in a digital wallet provides consumers with the opportunity to make payment transactions only using the customer’s face or thumbprint, which increases the level of security. He also noted that the practice of applying the mentioned payment method envisages that if the user’s smartphone is stolen, criminals will not be able to use the card without facial recognition. Separately, Phil Pomford underlined that the physical card is more vulnerable in terms of the mentioned risk. The mentioned means of payment in the framework of the implementation of a negative scenario can be used to make a contactless transaction.
The survey, the results of which became a kind of information base for the Worldpay report, was conducted in 40 markets in the Middle East, Africa, North and Latin America, Europe, North and Latin America.
The mentioned report contains a forecast according to which the share of consumers using digital wallets to make purchases on e-commerce platforms in the Asia-Pacific region will reach 77% by 2027. It is also expected that the corresponding figure in the structure of transactions in regular stores will be 66%.
In 2023, China became the leader in terms of such an indicator as the scale of use of digital wallets by representatives of the consumer community. The corresponding payment method was applied to 82% of spending on e-commerce platforms and 66% of purchases in trade establishments of physical presence networks in 2023. The total amount of the mentioned transactions has reached the $7.6 trillion mark.
The Worldpay report notes that three brands currently dominate the Chinese payment market, among them Alipay and WeChat Pay, which offer digital wallets to consumers, and the UnionPay card network. The company’s experts predict that by 2027 in the mentioned country, 86% of transactions in the e-commerce space and 79% of sales in regular stores will be made using virtual wallets. Phil Pomford says that in China, many people do not have a physical wallet, and they leave home only carrying their mobile phones.
It is worth noting that a high level of intensity in the use of digital wallets is currently also observed in India, which is nowadays the most populous country in the world with the largest number of young people. Last year, in this state, more than 50% of residents applied the specified payment method when shopping on online platforms and in regular stores. Unified Payments Interface (UPI) was one of the most popular transaction apps among Indian consumers in 2023. Worldpay predicts that in this country, the use of digital wallets will have a share of more than 70% in the structure of online sales and financial operations in regular stores by 2027. The demographic circumstance in the form of a large number of young people forms positive prospects for the development and spread of virtual payment methods in India.
It is worth noting that in some developed countries there is still a high level of consumer demand for credit cards. In Japan, in 2023, the share of these cards in the total structure of payment transactions was 57%. In South Korea and Singapore, the corresponding figure last year was recorded at 56% and 42%, respectively. In developing countries, a different tendency is being fixed. In Indonesia, Vietnam, and the Philippines, the share of credit cards in the total structure of payment transactions last year was 40%, 36%, and 34%, respectively.
Phil Pomford says that in developing countries, a significant part of the population does not have access to traditional banking services, which is why residents are opting for new-generation fintech solutions. He also noted that over the past couple of years in the mentioned countries, the opportunity to use a digital payment method on a smartphone took off very quickly.
As we have reported earlier, Mastercard Partners WorldPay to Address Payment Fraud Issue.
