The use of mobile wallets is set to grow and by 2025 more than half of the world’s population will have a digital wallet on their smartphone.
That’s according to research conducted by Boku, a global mobile payments giant, whose systems are used by 70 people.
The research shows that in 2020 there will be more than 2.8 billion mobile wallets in use, while in 2025 this will rise to 4.8 billion for a total of 60% of the global population.
The Covid-19 pandemic has accelerated the spread of mobile wallets, which are also more popular than credit card payments.
The region where the use of smartphone wallets is growing the most is South East Asia.
Boku notes that there are at least 439.7 million mobile wallets in this area with an increase of 311% from 2020 to 2025. In 2020, Indonesia, Malaysia, the Philippines, Singapore and Thailand had “only” 141.1 million wallets. Driving this growth is not only ecommerce but also apps such as Gram and Gojek.
China is the region with the highest absolute number of wallets, 1.34 billion to be precise, in the eastern region. Japan, Korea and Taiwan are candidates for exponential growth.
Next up are Africa and the Middle East, which expect to see 147% growth in wallets between 2020-2025. Driving growth is the use of electronic money systems.
eCommerce is driving mobile wallet growth in Latin America. Here, too, growth of 166% is expected by 2025. So far, the growth has been slow due to low smartphone penetration combined with a preference for cash.
And finally, there is slower growth in Western Europe and North America, which expect a 65% and 50% increase in mobile wallet usage respectively.
Two different types of mobile wallets
The use of mobile wallets differs by type. On the one hand, there are card-based mobile wallets, such as Apple Pay and Google Pay. On the other hand, there are mobile wallets with preloaded money such as AliPay and GrabPay. The latter type seems to be more popular in emerging markets.
Both represent both an opportunity and a challenge. Boku believes that wallets capable of handling billion-dollar transactions will also grow. Currently there are “only” 54; by 2025 there will be 69.
It is imperative for merchants not to fall behind and accept these new payment types.
Adam Lee, Chief Product Officer at Boku, explained:
“The markets that are set to grow the fastest are those with the lowest levels of card penetration, stored value wallets are thriving. In North America and Western Europe, which are dominated by card-based mobile wallets, we are seeing the slowest growth in mobile wallet adoption, as the technology provides merely incremental benefit.
We are seeing clear bifurcation in the market between card-based mobile wallets in developed markets and stored value mobile wallets that are ubiquitous in Asia and rapidly growing in all emerging markets”.
Loke Hwee Wong, vice president and general manager, APAC at Boku added:
“Southeast Asia is one of the most rapidly digitalising regions in the world. In 2020, the region added 400 million new internet users, with 70% of the region now online. Together with consumption trends brought about due to lockdowns during the pandemic, that has led to a familiarity with e-Commerce and an exponential rise in mobile wallet use. This is also because the region was heavily dependent on cash and bank transfer before mobile wallet use, and the convenience and accessibility, especially with stored value mobile wallets, will see Southeast Asia leapfrog the rest of the world in mobile payment adoption”.
Jon Prideaux, CEO of Boku concluded:
“We are witnessing a paradigm shift in payments driven by mobile wallets. Mobile wallets have lowered the barrier to making digital payments and in parallel ushered billions of new consumers into eCommerce. These consumers are not in North America or Western Europe, they are in emerging markets, and while they don’t have credit cards, they overwhelmingly have mobile wallets. For global merchants, mobile payment acceptance is not about accepting one type of mobile wallet or another, but ensuring that consumers in every market will have the required selection on payment types in order to monetize transactions.”
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