Consumers from China and India are the largest users of digital wallets in both online and physical sales.
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Digital wallets are the fastest growing payment method in the world, with Asia leading the way, according to a new report from payment processing company Worldpay.
Globally, digital wallets will account for 50% of e-commerce purchases and 30% of in-store purchases by 2023, with transaction value reaching $14 trillion. Reports show that this number is expected to reach $25 trillion by 2027.
As physical card and cash usage continues to decline, consumers in Asia Pacific are the largest users of digital wallets.
Last year, 70% of online payments and 50% of in-store payments in the Asia-Pacific region used digital wallets – the highest of any region.
Total digital wallet spending in the region, including e-commerce purchases and point-of-sale (POS) transactions, will reach nearly $10 trillion in 2023, led primarily by China.
Worldpay defines “point of sale” as a payment method in a physical store.
In comparison, digital wallet spending in Europe accounts for only 30% of e-commerce transactions and 13% of physical payments. In the United States, digital wallet usage accounts for 37% of online sales and 42% of physical spending.
Phil Pomford, general manager of Worldpay’s Asia Pacific e-commerce team, said: “In addition to convenience, biometric technology in digital wallets also brings a greater sense of security by simply using your face or fingerprint to make payments.” CNBC.
“Obviously, your phone can be stolen, but without facial recognition, no one can use your card, but your physical card can be stolen and used through contactless payments,” he added.
The survey was conducted in 40 markets across Asia Pacific, Europe, the Middle East and Africa, and North and Latin America.
Asia leads the way
By 2027, the proportion of Asia-Pacific consumers using digital wallets for e-commerce payments is expected to grow to 77%, and the proportion of digital wallets used for in-store purchases to 66%, despite global consumer demand for cash and bank cards. Usage continues to decrease.
By 2023, China will become the global leader, with 82% of e-commerce spending and 66% of physical purchases made through digital wallets, with a total transaction volume of approximately US$7.6 trillion.
In China, many people no longer have physical wallets in their hands and only carry their mobile phones when they go out.
Phil Pomford
World Payments Asia Pacific
“China’s payments market is overwhelmingly dominated by three ubiquitous payment brands: the digital wallets Alipay and WeChat Pay, and the bank card network UnionPay,” the report states.
The report predicts that by 2027, 86% of e-commerce and 79% of in-store sales in China will use digital wallets for transactions.
“Many people in China no longer have physical wallets in their hands, they only take their mobile phones with them when they go out,” Pangford said.
India, the country with the largest population and the largest youth population in the world, is not far behind.
Last year, more than 50% of people used digital wallets to pay for online and in-store purchases, and the country’s homegrown Unified Payments Interface (UPI) is one of the most popular transaction apps.
Worldpay predicts that the use of digital wallets in both online and in-store sales is expected to continue to be the dominant payment method in India, accounting for more than 70% of total sales by 2027.
In Asia, credit cards remain dominant in developed economies such as Japan (57%), South Korea (56%) and Singapore (42%). However, developing countries such as Indonesia (40%), Philippines (34%) and Vietnam (36%) prefer digital wallets to other payment methods.
“Many of these markets have sizable unbanked populations. So the ability to suddenly have this digital payment method on your phone has obviously evolved very quickly over the past few years,” Pumford explained.
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