During the last decade, mobile app developers and start-up fintech vendors have offered a variety of innovative digital wallet solutions across global markets. Due in part to the COVID-19 pandemic and the move away from cash-based payments, digital wallet apps have gained rapid new user adoption.
Initially, digital wallets centered on providing easy eCommerce payments or consumer person-to-person payments. This early growth enabled large tech companies -- such as Google, Apple, and PayPal -- to launch services and achieve a presence across the online payments and global retail ecosystems.
Digital Wallet App Market Development
According to the latest worldwide market study by Juniper Research, the total consumer spending via digital wallet apps will exceed $10 trillion in 2025 -- that's up from an estimated $5.5 trillion in 2020.
Moreover, the research findings found a dramatic 83 percent growth in digital wallet spending will be fuelled by the heightened adoption of digital payment solutions during the ongoing global pandemic.
Digital wallets, where payment details are stored and accessed via a smartphone software application, have proven themselves as being both convenient and secure -- acting as a platform for future innovation and growth.
The market study identified that digital wallets are becoming increasingly capable of both in-person contactless payment and online remote payments via the public internet.
The market study identified that digital wallets are becoming increasingly capable of both in-person contactless payment and online remote payments via the public internet.
The Juniper Research analysts forecast that in 2025, contactless and eCommerce payments will account for 50 percent of total wallet spend, from just under 36 percent in 2020.
According to the Juniper assessment, upside growth opportunities make this a high-priority area where digital wallet providers need to maximize their commercial merchant networks.
The new research found that the rapid growth in digital wallet availability, coupled with rising adoption, has left merchants with difficult decisions around acceptance.
The new research found that the rapid growth in digital wallet availability, coupled with rising adoption, has left merchants with difficult decisions around acceptance.
The market study identified integration costs for multiple digital wallets as challenging for merchants -- meaning that picking the best-performing wallets to select and focus on is highly important.
"Merchants must base their payment strategies around wallet acceptance in order to support a digitally-engaged addressable market, but must also judge the right wallets to target, or they will be lumbered with increased costs and limited benefits," said Alexandria Sadler, associate research analyst at Juniper Research.
The research also found that the increased use of contactless mobile payments during the pandemic, prompted by concerns around cash, has seeded greater wallet use across the payments’ ecosystem.
"Merchants must base their payment strategies around wallet acceptance in order to support a digitally-engaged addressable market, but must also judge the right wallets to target, or they will be lumbered with increased costs and limited benefits," said Alexandria Sadler, associate research analyst at Juniper Research.
The research also found that the increased use of contactless mobile payments during the pandemic, prompted by concerns around cash, has seeded greater wallet use across the payments’ ecosystem.
Outlook for Digital Wallet Applications Growth
Juniper analysts forecast that contactless adoption will rise, with over 34 percent of mobile phone handsets anticipated to use contactless payments in 2025 -- that's up from 11 percent in 2020.
This growth means that integrating contactless-enabled digital wallets within typical in-store retailer checkout processes will be critical to meet evolving mobile phone app user expectations.
I believe that financial services companies, such as traditional banks, may be able to identify niche applications where their online payment service offerings are viable. Many of these organizations are already pursuing a digital transformation agenda that could enable them to launch new platforms with associated partner ecosystems.