More than one in two people will use a mobile wallet by 2025, as cash is increasingly displaced, according to a study by mobile payments company, Boku.
This means, over the next four years the number of active mobile wallets around the globe would increase from the current 2.7 billion to 4.8 billion.
Leading the way in this transition is Southeast Asia, with a 25.5% compound annual growth rate (CAGR) and an expected overall growth of 311% in the next five years.
The rise in e-commerce, and the dominance of super-apps like Grab and Gojek – particularly in markets such as the Philippines and Indonesia – are just some of the drivers of wallet adoption in this region.
Following closely behind – in areas where wallets are offering access to financial services for the underbanked – is Latin America, and Africa and the Middle East. These regions are due to expand their usage of mobile wallets by 166% and 147%, respectively, by 2025.
In Africa and the Middle East, adoption is being catalyzed by the increasing usage of mobile money services, such as M-Pesa, which are offering improved access to e-commerce.
In Western Europe and North America, however, wallet uptake is moving more slowly – at 65% and 50% by 2025, respectively. This is a result of high levels of card penetration and contactless usage at physical points of sale.
Nevertheless, markets such as the UK are seeing a spike in card-based mobile wallets, due to the adoption of contactless spurred on by the pandemic. Thanks to shifts like this, Boku predicts that three quarters of Europeans will be using a digital wallet by 2025.
“We are witnessing a paradigm shift in payments driven by mobile wallets,” says Jon Prideaux, CEO at Boku. “Mobile wallets have lowered the barrier to making digital payments and ushered billions of new consumers into e-commerce. These consumers are not in North America or Western Europe, they are in emerging markets, and while they don’t have credit cards, they overwhelmingly have mobile wallets. 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.”
Boku’s report follows an eventful week for the mobile wallets sector in Europe, with the merger of Vipps, MobilePay and Pivo as they look to compete against the likes of Alipay, Apple and Google.