In 2019, mobile wallets overtook credit cards to become the most widely used payment type globally. In 2020, the COVID-19 pandemic became another accelerant of the continued digitization of the global payments landscape.
While the impact of the pandemic has been pointed to by many as a transformative effect on digital payments, it has merely been an accelerant of the digital payments revolution that has been underway for years. Mobile payments, and more specifically mobile wallets, have been the greatest driver of this revolution on a global basis.
The Mobile Wallets Report 2021 analyses the global mobile payments market in depth, focusing primarily on key developments within mobile wallets, as well as presenting data on how wallets are being used around the world.
The report highlight key growth markets, and the trends driving this growth.
While countries and regions differ greatly in the current status, projected growth, consumer attitudes and more, there are a number of global trends that are worth further exploration.
It’s important to highlight the ways in which developed markets, primarily in North America and Western Europe, differ from the regions which are highlighted in this report.
Card-Based Mobile Wallets: In developed markets, in which debit, and especially credit card penetration dramatically exceeds the rest of the world, mobile wallets are far more likely to utilise payment card and contactless mobile device hardware, like NFC chips.
The card-centric ecosystem, and the related dominance of OEM Pay services such as Apple Pay, Google Pay and Samsung Pay in Western markets has persisted as card payments have reached near ubiquity prior to the digital payments revolution. As such, wallets are almost entirely, card-based.
Card-based wallets are using contactless NFC payments with physical payment terminals that typically also accept card payments. These card-based wallets are increasingly adding express checkout functionality to merchants, so that consumers can use their stored payment and personal details.
Stored Value Mobile Wallets: In the rest of the world, and most notably in the markets covered in this report, payments cards have never reached the level of use that they have in North America and Western Europe.
In many of these markets, cash and cash equivalent payment types are quite popular still today. As a result, mobile wallets have been built outside of the payment card ecosystem, and are increasingly becoming replacements for cash-based payment methods.
These digital, stored value wallets can be funded directly from a bank account, or by other methods, including cash, bulk disbursements or P2P payments. Stored value mobile wallets rely on a multitude of cash in/cash out methods that enable consumers to digitize, transmit, and convert digital cash back into bank notes, when needed.
At the end of 2020, there were over 2.8 billion mobile wallets in use, and it is projected that this number will increase by nearly 74% over the next five years, to reach 4.8 billion by the end of 2025.
The following chart breaks down the contributions of each region globally towards mobile wallet use:
- Far East & China will be by far the largest mobile wallet market, with WeChat Pay and Alipay accounting for a large number of users. These wallets will be used predominantly for e-commerce, but also have strong money transfer use cases.
- Africa & Middle East will also see high levels of adoption; growing by 147% between 2020 and 2025. This is driven by expanded usage of mobile money services such as M-Pesa, which are increasingly offering additional services such as access to e-commerce.
- eRetail payments continue to be the primary driver of mobile wallet usage in West Europe. However, some markets, such as the UK, are seeing contactless payments as a major driver of usage going forward; spurred on by the pandemic.
Key findings
- Southeast Asia is the fastest growing mobile wallet region – Mobile wallet use will grow by 311% between 2020 – 2025, reaching up 439.7 million wallets in use across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam from 141.1 million in 2020. The rise in e-commerce and dominance of super-apps like Grab and Gojek, particularly in markets like the Philippines and Indonesia, is driving accelerated mobile wallet adoption.
- China reaches maturity while Japan, Korea and Taiwan set for hyper-growth – The Far East and China continues to be the largest mobile wallet region in the world with 1.34 billion users in 2020. Market saturation is resulting in slowing growth in China, with a CAGR of just 2.2% per year. Meanwhile, markets including Japan, Korea and Taiwan will continue to see accelerated adoption of mobile wallets with 98.4% market penetration by 2025.
- Africa & Middle East is the second biggest mobile wallet market – The second biggest mobile wallet market is set to grow by 147% between 2020 – 2025. This is driven by expanded usage of mobile money services such as M-Pesa which are increasingly offering additional services such as access to e-commerce.
- Latin American growth is being supercharged by e-commerce – This region is set to increase mobile wallet use by 166% between 2020 – 2025. Long held back by consumers’ preference for cash-based payments and comparatively lower smartphone penetration, this is fast changing, and the region’s e-commerce growth is supercharging mobile wallet use.
- Slow growth in Western Europe and North America – With 65% growth in Western Europe and 50% in North America by 2025, these regions will see the least amount of mobile wallet growth in the next five years. However, markets such as the UK are seeing a rise in card-based mobile wallets due to the adoption of contactless spurred on by the pandemic and shift towards cashlessness.
The growth and bifurcation of mobile wallet use presents both an opportunity and challenge for merchants.
The number of mobile wallets transacting over $1 billion per year is set to grow by 27% from 54 wallets in 2020 to 69 wallets by 2025. This provides a lucrative opportunity for merchants looking to acquire valuable customers, many of whom only use mobile wallets.
However, not only are consumers using mobile wallets more, they are using more mobile wallets. Consumers in high growth markets such as India and Indonesia use an average of 2.74 wallets.
This means that not only do merchants need to accept wallets but they need to ensure broad coverage across each target market.
Download Mobile Wallets Report 2021
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