Mobile digital wallets use to rocket
Over the next five years the number of mobile digital wallets will almost double.
The prediction comes from research house ABI which estimates that mobile digital wallets will increase from a circulation of 3.5 billion in 2022 to over 5.6 billion in 2027.
“Ecosystem players in the mobile wallet market should prepare for the steady migration of many economies away from cash. Compelling mobile wallet solutions will cover the need for enhanced functionalities and user experience,” said Sam Gazeley, Digital Payment Technologies Analyst at ABI Research.
He added: “Underbanked regions such as the Middle East, Africa, and Latin America will experience the strongest growth in mobile wallets. These regions present an opportunity to access banking services through a wallet or mobile money services, further driven by having mobile infrastructure readily available rather than banking infrastructure.”
ABI stated that the global mobile wallet market is demonstrating strong growth through the post-pandemic era.
Underbanked and unbanked
The Middle East and Africa, which have the largest proportion of underbanked and unbanked populations, are undergoing a ground-up transformation of their digital payment ecosystem.
Services such as M-Pesa and MTN MoMo for e-commerce are driving this growth.
And consumers in Africa are continuing to experience the benefit from the widespread proliferation of alternative payment solutions developed by international neo-banks, challenger banks, and telcos. The region overall will demonstrate robust growth over the forecast period, slightly behind that of Latin America.
Latin America is also experiencing a boom in mobile digital wallet use. As the second fastest-growing market for e-commerce after the Asia-Pacific, many consumers are shopping and banking for the first time in a digital ecosystem.
Latin America is effectively echoing the market seen in the Asia-Pacific over the last few years, in which access to better connectivity and digital services caused a surge in the mobile wallet market. ABI Research sees Latin America as the fastest-growing region over the forecast period.
As it relates to the market ecosystem, the incumbent OEM wallets, such as Apple Pay, Samsung Pay, and Google Pay, are seeing increased pressure from Revolut, Monzo, and Curve on the neo/challenger bank side and payment companies such as PayPal and Venmo.
Each seeks to outperform traditional brick-and-mortar banking solutions through digital-first approaches.
“Furthermore, smart card vendors that have primarily focused on the physical payment card market, such as Thales, G+D also have a key role to play in the adoption of mobile wallets, either by offering their own wallet solution, providing cloud-based or decentralized solutions for the digitization of cards, or assisting central banks in launching digital currencies,” Gazeley concluded.