Experts predict that more than 60% of the world population will be using digital wallets by 2026

Global take-up of digital wallets is on the increase. The figures, led by Juniper Research, are predicted to accelerate further over the next four years, driven by the adoption of ‘super apps’ and QR code-based payments in developing countries.

A digital wallet (sometimes known as an electronic wallet) is a financial transaction application that runs on mobile devices. It works by securely storing a person’s payment information and passwords, allowing them to pay using their device when they’re out shopping, omitting the need to carry cards or cash. While they offer a convenient service for many, they also allow people in financially underserved parts of the world to access financial services they may not have been able to before.

Photo by Rodion Kutsaiev on Unsplash

The research predicts that the number of people using digital wallets will hit 5.2 billion globally by 2026, compared with 3.4 billion this year, which represents a strong growth of over 53%. Payments using QR codes will be the most used digital wallet transaction types by 2026, according to the study, with 380 billion global transactions predicted for that year. 

Growth is predicted to be driven in developing countries that are considered cash heavy, spurred by the presence of “super apps”, which combine multiple services as well as offer the ability to make digital payments, including wealth management and eCommerce. The Southeast Asian nations of the Philippines, Thailand and Vietnam are expected to see the fastest growth, with Juniper predicting that 75% of these countries’ populations will be using digital wallets by 2026.

Over the last few decades, many aspects of the tech world have taken off. The gambling industry, which has skyrocketed since launching online casinos, is a prime example of that. Websites like Casino Universe now list and review hundreds of them, and the global ecommerce industry, which has predicted sales of reaching more than $5 trillion by the end of 2022, is just another example of how tech is continuously making its mark on the world.

With rising access to online and mobile commerce services acting as driving forces behind the use of digital wallets, it shouldn’t come as a surprise that they are on the up. In fact, another study by Juniper found that the value of digital wallet payments will be more than $12 trillion in 2026, with PayPal as the leading digital wallet provider, followed by Alipay, WeChat Pay, Apple Pay and Google Pay.

While access to online and mobile commerce services and “super apps” has been making its mark on the digital wallet industry, the technology got an unexpected boost in demand during the Covid-19 pandemic. With tight restrictions to prevent physical contact put in place by governments around the world, consumers were forced to turn to digital services and contactless payments. Mobile payments now represent the “new normal” as much as working from home does. 

It may all look and sound promising for digital wallets, but experts have warned vendors that they must remain innovative in order to stay competitive when entering new geographic markets, such as those in Southeast Asia. In order to drive adoption, QR payment vendors have been recommended to integrate loyalty features and personalized marketing capabilities as a way of incentivizing merchant acceptance. 

Juniper has also recommended that vendors must find intelligent ways to differentiate themselves. Suggestions include integrating machine learning in order to provide spending insights of consumers, as well as introducing news services, like wealth management, to add value to their product. 

There are definitely some clear advantages to the use of digital wallets for consumers, including limiting the amount of financial and personal information people carry on them day to day, like a physical wallet or physical cards, along with the sheer convenience of just ‘tapping’ your phone. However, security risks could become an issue, especially if people use a digital wallet from a provider that hasn’t been vetted or doesn’t have an established reputation, or if the device gets stolen and someone accesses the finances.

With all this in mind, it will be interesting to see how digital wallets evolve over the next four years. 

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