Digital wallets transaction value to surpass $16 trillion globally

A new study finds that the total value of digital wallets transactions will rise from $9 trillion in 2023 to $16 trillion in 2028, a growth of 77%.

This trend is driven by growth across both developed and developing markets, as the increased adoption of advanced services such as BNPL (Buy Now, Pay Later) and microloans drives end-user engagement.

The study found that in a highly congested wallets landscape, diversifying their appeal to users is vital.

Advanced Services Create New Revenue Streams

The report identified advanced services as a key source of revenue growth for digital wallets. Advanced services, such as BNPL or microloans, are allowing digital wallet providers to diversify their revenue.

The popularity of BNPL, especially among younger consumers, will draw greater numbers of users, and generate additional revenue. This approach can be seen with Apple’s roll-out of add-on services, including Apple Pay Later.

“Advanced services give digital wallet providers an opportunity to differentiate themselves in a congested market and generate additional revenue,” says Research author Michael Greenwood.

“Super app strategies, which many digital wallets are pursuing, will rely on the effective deployment of advanced services at scale.”

QR code payments

In keeping with this, the volume of QR code payments in the leading Southeast Asian market will increase from 13 billion in 2023 to 90 billion in 2028.

High growth in Southeast Asia and other developing markets is largely down to financial inclusivity that QR payments offer; enabling unbanked users to access digital payments. Conversely, Western markets have seen very limited adoption; highlighting the global divide in QR payment markets.

Critical International Interoperability Standards

National QR payment schemes, including India’s UPI and Brazil’s Pix, played a key role in encouraging market adoption, with their success driving implementation of national schemes in 2023 in Kenya and Bangladesh.

However, the research found significant growth to market volume will come from cross-border interoperability within Southeast Asian markets.

While international interoperability has been offered from payment providers like Alipay for years, national QR payment standards are now unifying across borders, like:

• Indonesia, Malaysia, and Thailand have already unified their payment standards; enabling businesses to accept payments from international visitors using their domestic digital wallets.
• Singapore and the Philippines set to collaborate by the end of 2023; further unifying payments across the region.

QR P2P Bank Transfers See Traction in Europe

The adoption of QR payments overall in the west remains low.

However, according to the research, the area of QR P2P bank transfers has gained significant traction since 2022, with Belgium’s Payconiq and Spain’s Bizum used by a significant proportion of users.

Furthermore, Revolut and Vipps MobilePay have been promoting P2P and business-based QR solutions across Europe through reduced transaction fees.

To maximise adoption, payment providers should focus on offering competitive pricing versus established local payment methods.

Security & Convenience Key Drivers

The research found that security benefits are a key driver of digital wallet use in e-commerce in developed markets and with QR codes.

Many consumers do not wish to enter card information online. With digital wallets, this issue is reduced, as tokenisation enables card and other payment information to be used in a highly secure way.

The research also identified that as digital wallets become broader, including elements of digital identity, convenience will play a greater role; enabling wallet services to act as an all-inclusive app for financial wellbeing.

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