FIS has launched its annual Global Payments Report. Over the next few days PCM will bring you highlights broken down into regions with the most interesting analysis and statistics presented here.
The evolution of consumer payment methods continues to unfold, reshaping payments diversely in its wake around the world. Payment preferences are as diverse as the people that use them. Yet even in the wake of change, we find global trends across the universe of commerce.
In 2020, the biggest trend in consumer payment preferences continues to be the rise of digital and mobile wallets. They make shopping online easier than ever and already lead e-commerce payment preferences with 42% of spending in 2019—up from 36% since 2018.
China continues to lead the way in digital and mobile wallet use accounting for a remarkable 71% of e-commerce spend, but adoption is increasing everywhere: 32% of e-commerce spend in India, 25% in Germany, and 24% in the US.
Mobile wallets are also transforming payments at the point of sale: over 1 billion shoppers will make a digital or mobile wallet payment in 2020. From retailer-specific apps to wallets issued by financial institutions, device manufacturers and technology platforms, digital and mobile wallets are providing convenience and safety to consumers and businesses around the world.
The smartphone is becoming the new wallet and many consumers are choosing to put their preferred cards in their phone in lieu of carrying the physical card. That’s driving big changes in global POS payment adoption: from 16% in 2018 to 22% in 2019. In China, where digital/mobile wallets Alipay from Ant Financial and WeChat Pay from Tencent dominate, mobile proximity payments using QR codes drove nearly half (48%) of POS payments in 2019. China’s overwhelming adoption of mobile and digital wallets at the POS remains an outlier from the rest of the world, yet the global trend is clearly following in their footsteps.
Digital and mobile wallets already account for 22% of global POS spend in 2019 and we project they will account for nearly a third (30%) of consumer payments within five years.
Outside of China, the most popular digital and mobile wallets are colloquially known as “The Pays.” Until recently that shortlist included Apple Pay, Google Pay, and Samsung Pay. Those incumbents are now facing competition from another “pay” – Amazon Pay.
Amazon reports growth of 59% in active merchants and 103% in overall revenue from between 2017 and 2018; all Amazon Pay markets globally are showcasing double-digit growth.
Rounding out e-commerce, the growing share of mobile and digital wallet adoption we project through 2023 comes largely from gradual declines in the physical use of credit cards, debit cards, and charge/ deferred debit. Cash on delivery, pre-paid cards, and PostPay services continue to provide essential services in some markets yet will likely see their overall share slowly decline through 2023.
The only other online payment method we forecast to gain market share are buy now pay later – such as Affirm, Afterpay and Klarna – to satisfy consumers who enjoy the immediacy that this option provides.
The report forecast these services will earn nearly 3% of global e-commerce spend by 2023. At the POS, it expects to see more transactions conducted digitally – driving further decline in cash use.
The forecast is for modest global gains for both credit cards and debit cards at POS. They will continue to anchor the market representing nearly half of global POS spend in 2023 as consumers continue to follow the ingrained habit of reaching for a card when making a payment.
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