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Monday, August 05, 2019

Digital Wallet Spending Surges in Europe and America

The advantage of a digital wallet is that -- for both online and offline transactions -- it affords the user an opportunity to make secure, quick payments, obviating the need for a physical card or to enter bank details for every purchase.

For the unbanked, it goes further, providing a means of economic inclusion, both as an alternative to cash payments and as a way of accessing financial services such as loans and savings accounts.

For the wallet provider, service evolution from the early days of online payments and person-to-person remittance has enabled several fintech vendors to achieve a strong presence across the payments and retail ecosystems.

This now extends both to offering offline and online goods payments on their own and third-party storefronts, together with loyalty programs, bill payments and digital banking services.

Digital Wallet Market Development

Spending via digital wallets across Europe and North America will increase by 40 percent this year to nearly $790 billion, according to the latest worldwide market study by Juniper Research. The largest growth in 2019 will come from in-store payments, with mobile contactless payments more than doubling across these regions.

The study found that while eRetail through wallets would remain the largest contributor to consumer spending, continued migration from cash would see a surge in wallet use at the point-of-sale (POS). This was the case amongst younger digital wallet users and in the U.S. market, where a third of Apple iPhones are now used for contactless payments.


The study findings highlighted the importance of digital wallet providers establishing partnerships with leading banks to maximize reach amongst wallet users. Juniper Research’s analysis found that Apple far outstripped its rivals -- achieving the largest addressable share of banking consumers in 7 of the 10 national markets assessed.

In the online space, the study found that wallets -- including Apple Pay, Amazon Pay and Visa Checkout -- had also significantly expanded their availability at merchant sites, although all lagged well behind PayPal in this regard.

Meanwhile, social payments through wallets will grow strongly both this year and beyond. It's a trend expected to be accelerated in 2020 by the emergence of Facebook’s Calibra wallet and its attendant Libra cryptocurrency.

Outlook for Digital Wallet Applications Growth

However, the study results were less optimistic about prospects for Wearable-Pay wallets -- indicating that their limited addressable bases and functional constraints meant they would struggle against converged wallets, providing an extensive portfolio of online and offline payment offerings.

"Wearable-Pay solutions are still completely dependent on the smartphone and are ultimately limited to a single use case. They are thus likely to remain, at best, a niche offering," said Nick Maynard, lead analyst at Juniper Research.