Digital Cash is Here, say Goodbye to your Wallet
There are now over 1 billion users of mobile digital wallets worldwide
With 5 billion users of of mobile devices worldwide, mobile fiat based digital wallets account holders have significantly increased to 1 in 5 connected users. As of Jan 2019, fiat based electronic wallets have more than 1 Billion active users with transactions averaging 9 Billion USD per day worldwide.
In some countries, e-wallets are now part of the daily life. That is the case of China and India where there are more than a billion active users alone.
Digital mobile wallets growth is strong in countries with low banking penetration rate notably in Asia and Africa.
What is a mobile wallet?
Some important characteristics of a modern mobile wallet:
- No fee /micro fee person to person transfers
- No fee/micro fee merchant transactions
- Instant funds transfer
- No Credit Card needed
- Move money to and from your bank account or stand alone
- Send or receive funds by QR code, ID (email, phone), USSD or contactless
Lets look at the the countries and what they are using:
China has approximately 1.2 Billion mobile wallets
“In China, you don’t need a wallet, neither a credit card, you just need a smartphone”. This is so true that some services are payable only through mobile digital wallets. In fact lack of cash is becoming a problem. The major wallets in China are: Wechat Pay and Alipay with over a billion active users. Wechat from Tencent, has more than 800 million active users, and an average daily transaction of 7 billion USD, Wechat Pay is part of Chinese everyday life with both P2P and P2B payments. Transactions among Wechat users are free of charge. There is a fee of 0.1% for every withdrawal of more than RMB 1000 (US $145). Alipay has about 520 million registered users and 450 million active. The company accounts more than 50% of China’s US$5.5 trillion mobile payment market. Like on Wechat Pay, transactions within Alipay are free. However, merchants are charge a fee of 0.55% at every purchase.
India counts around 450 million e-wallets users shared between companies like Paytm, Freecharge, Mobikwik, Airtel Money
India’s 2016 demonetization, led to rapid adoption of mobile cash apps. PayTM, founded in 2010 allows merchant and p2p transfers and has 300 million users with over 80 million daily active users. Oxigen Wallet is the first no bank wallet approved by the Reserve Bank of India and is used by merchants like KFC, Ebay and the Highway department of India. Maximum transaction fee is 1%. Airtel Money from Airtel is doing free transfers, and charges 3% to withdrawal to a bank account.
Singapore has 25% of its 5 million people using digital wallets
PayNow is an electronic fund transfer service available to retail customers of 9 banks participating in Singapore. It allows instant and free fund transfer from a bank to another using just phone numbers or Singaporean NRIC. Paynow can use QR codes to speed data input. The service, which was launched in 2017 already has over 1.6 million users.
South Korea has 40 million mobile wallet users
More than 10 trillion KRW are exchanged in South Korea through mobile money transactions. The country has over 20 million mobile fiat wallet users.
Kakao Pay is from one of the largest chat apps in South Korea. Leveraging on its sister app user base of 220 million people, the wallet rapidly became popular in South Korea and counted more than 10 million users just 20 months after its launch. Recent figures shared by the company show 20 million active users for its digital wallet. Users can pay their bills, top up their mobile, pay their parking fees, buy groceries etc.. Transactions, as well as bank transfers are free of charge.
Naver Pay With its 4.5 million monthly active users, Naver Pay is a major player in the 10 Trillion Won (US $9 Billion) mobile payment industry in South Korea. N Pay fee structures capped at 0.8% per transaction.
Recent unicorn Toss now has10 million users.
Thailand has 40 million PromptPay users
PromptPay is an E-payment launched by the Bank of Thailand early in 2017. It uses the same tech as Singapore’s Paynow and allows instant transfers using real time payment switch from Vocalink technology. In addition of being instant, transfers are free. PromptPay allows micro-payments, another innovation in Thailand and government adoption has help it claim 40 million users.
Other local wallets are Line Pay, True Money, and AirPay.
Line Pay is the payment service and electronic wallet of the Japanese chat app giant LINE. Line is the most used chat app in Thailand with 32 million daily active users. The social network has developed Line Gift Shop, a marketplace where users can pay with free of charge using Line Pay. Line Pay in Thailand was rebranded as Rabbit Line Pay, after partnering with Rabbit, a smart card provider for mass transport and electronic payments.
TrueMoney is a mobile payment service provided by True Corporation the third largest telecom group in Thailand. It offers services ranging from airtime top up, bills payment, prepaid card and money transfers including international remittances. All this at almost no fee. The highest fee being 20THB for every bank transfers . TrueMoney has a mobile app available on Play Store and Apple Store. The App has crossed the 10 million downloads.
Malaysia has over 20 million mobile wallets
Boost, BigPay, GrabPay and Wechat Pay and Grab pay are all players in the e-wallet race in Malaysia.
Myanmar has over 2 million mobile wallet users
Myanmar is a country with high rate of unbanked people. Only 17% of the population have a bank account. Few companies are working on serving large majority of the unbanked people in Myanmar.
M-Pitesan is the Mobile money service of Ooredoo, one of the largest telecom company in Myanmar has reached 400,000 users is exclusively reserved for Ooredoo SIM card holders. Users can deposit and withdraw funds in their wallets at any of the several Agents nationwide. M-Pitesan has a mobile app available on Play and App stores. However, it also works with USSD
Ok Dollar is a mobile payment system allowing fast and secured fund transfers across Myanmar. The service is used for various things among which electricity bill payments, mobile top up, merchant payments and money transfers. Ok Dollar claims 600,000 users with 90,000 active daily.
Wave money, launched in 2015 by Telenor Myanmar and Yoma Bank, Wave Money was developed to provide accessible and safe financial services in a country where only 17% of the people can access financial services. All transactions are done using just a mobile number, excepting for deposits and withdrawals, performed at Wave Shops.
Vietnam has over 10 million mobile wallet users
ZaloPay The social network Zalo has about 50 million users in Vietnam. Yet ZaloPay is reportedly to have a little more than 1 million downloads on Play Store.
Vimo works with banks. This enable its users to sync their bank accounts and withdraw at ATM. Vimo also offers other traditional services among which bill payments, funds transfers, and payment integration. There are about 10 million Vimo wallets in use in Vietnam
Indonesia has over 20 million mobile wallet users
T-Cash has more than 20 million users and 50 thousand merchants, T-cash is an electronic wallet and mobile payment service launched in 2007 by Telkomsel, the largest telecom company in Indonesia. At first, the service uses only Unstructured Supplementary Service Data. Since 2017, the wallet is available on Google Play and App Store. Over the last ten years, T-Cash has strived to reduce cash transactions in Indonesia which represent 83%. Users reportedly spend an average of US $4.8 per transaction on T-Cash and conduct at least two transaction per month.
XL Tunai was launched in 2012 by XL Axiata, allowing registered and unregistered users to make electronic monetary transactions. It is used for various purposes in Indonesia; online payment, fund transfers, utility bill payment, phone airtime top up, among other. Unregistered users can use all of the above except fund transfers which are reserved only to registered users. XL Tunai had about 58000 users and 130 merchants in Indonesia as of late 2014.
Russia has 100 million digital wallet users
Yandex Money has more than 40 millions users in Russia. According to a research by TNS, one out of 3 three internet user in Russia pays with Yandex Money e-wallet. 76000 online stores accepted Yandex checkout including Aliexpress, BlaBlaCar and Skype. Yandex also offers physical and virtual cards through a partnership with MasterCards. The company has so far issued 500,000 plastic cards and 11 million virtual cards.
Qiwi is one of the few wallets that has a mobile app available on the 3 main operating systems: Google,IOS and Windows. Qiwi offers cards through a partnership with Visa. Its 20 million users can transfer funds, pay bills, pay online and use one of the 90,000 Qiwi kiosks and terminals nationwide.
WebMoney founded in 1998 has 37 million users worldwide, with about 114,000 daily active. The platform has close to 400,000 transactions every month, with a maximum transaction fee of 0.8%.
Philippines has over 10 million users
A report from the Bangko Sentral NG Pilipinas, Philippines’ Central Bank published in 2017 showed that 86% of Filipinos don’t have a bank account.
GCash has 10 million users, GCash is one of the pioneer in Philippines digital payment industry. Developed and operated by Globe Telecom, a major telecommunication service provider in Philippines, GCash offers a digital wallet and payment solution through mobile app available on IOS and Android and through EMV cards via a partnership with MasterCard and American Express. GCash users can pay bills, shop online, top up airtime, send money and even get a credit line through their e-wallet. There is a 1 PHP fee for every money cash in.
PayMaya was Founded in 2007, PayMaya is an electronic wallet available on IOS and Android. It has over 1 million users in Philippines. The electronic wallet allows fast, secure and free funds transfers among its users with a maximum of 30 transactions per month. While fund transfer on the network are free of charge, there is a 1.5% fee for every successful wallet cash in and a fee of 15 PHP for every ATM withdrawal.
Africa has 40 million mobile wallets users
Kenya
M-Pesa is considered as the pioneer of Mobile Money services in Africa. Using USSD, M-Pesa doesn’t require internet connection to work. In a context where banking services are still widely not accessible, M-Pesa filled the gap. Safaricom, the operator of M-Pesa in Kenya reported 26 million users, and over 184 billion KES (US $ 1.8 billion) worth of transactions from 2007 to 201
Cameroon
Banking services are still considered a luxury in Cameroon. Many Cameroonian cannot afford fees related to financial services and Banking. Telecommunication companies spot the opportunity and, following the step of Safaricom in Kenya, they started offering mobile money service mainly on Unstructured Supplementary Service Data. The main mobile money solution in Cameroon are Orange Money and MTN Mobile Money with a combined number of approximately 5 million users in the country.
Orange Money is a Mobile money service designed and operated by Orange Telecommunications. The service is available in 13 countries in Africa and Middle East and has more than 10 millions users. Orange Money operates in partnership with the BICEC bank which insures the regulatory aspect. For transactions of less than 6500 XAF (US $12), fees can go up to 4%. Above 6500 XAF, transaction costs are very low and even free when it comes to transactions above 500,000 XAF (US $883)
MTN Mobile Money or MTN MoMo, is a wallet provided by MTN enabling users to send and receive funds, pay their utility bills, pay at merchant’s points, buy airtime and even pay for tuition fees.Through a recent partnership with Worldremit, MTN MoMo users can now perform international remittances operations. MTN MoMo has more than 1000 points of sales nationwide where deposits and withdrawals can be done. MTN MoMo fees changes in regards to the service. For tuition fees payment for example, there is a maximum fee of 500 XAF (US $0.90) for tuition above 30,000 XAF (US $53)
United States has 110 million mobile wallet users
The United States is home to one of the very first digital wallet: Paypal. The company was founded in 1998 and is now a major player in digital finance. But their inability or reluctance to reduce fees has encouraged a host of new and cheaper mobile wallets:
- Venmo — Free P2P payments, owned by paypal
- Google Pay — Free P2P and merchant payments with card
- Square Cash App — Free P2P payments, no fee from debit card
- Zelle — Free instant P2P payments direct from major banks
- Apple Pay — Used with debit card is free P2P and merchant payments
Venmo adopted the social media approach. In fact, just like wechat pay, venmo users can have a friend list. Users also have the option of publishing their transaction on their timeline.
What make Venmo so viral it’s probably its fee structure and its speed. Transfers within Venmo users are free as well as withdrawals through bank accounts. Transactions are fast and safe and the withdrawal threshold is US $3000 per transaction. Although Venmo hasn’t publish figures on its number of users, Verto Analytics estimated the wallet has around 7 million active users.
Google developed a fiat based electronic wallet released in September 2015. Google Pay is available to any Google account user in US, UK and India and it’s very simple to use:
Add a payment method, debit or credit card to your G Pay wallet; every time you make a purchase, Google will convert your money into token that will be sent to the merchant. This way, merchants have no access to customer’s personal data. Google Pay has partnered with banks, POS terminal providers and card issuing companies, to provide cardless payment, and electronic transfers. G Pay has 24 million active users.
Launched in March 2015, Square Cash is a mobile app that allow users to transfer money using a unique username known as cashtag. The application, which has been rebranded as Cash App records about 7 million active users as of early 2018.
Transactions within Cash App ecosystem are free and withdrawal can only be done through credit and debit cards
Europe
Europe is the best example of economic and social integration in the World. It is home to several digital payment solutions operating cross-border and seamlessly. Among the famous electronic wallets and digital payments services in Europe, there are Skrill and Neteller, solutions offered by Paysafe Group the online payment giant. These later have a strong establishment in the continent.
Cross Border Remittances
While most most mobile wallets are used domestically, cross border transactions have seen improvements in speed and price. Multiple new companies like Transferwise and Xoom help in a variety of new channels. The average cost of sending $200 in 2018 via a mobile channel is just 1.7%. The cost to send the same was 10% in 2008! The high fee monopoly Western Union and MoneyGram had is giving way to very reasonably priced and convenient cross border money moments.
Conclusion — if it’s free, you are the product
While consumers are reaping the benefits in convenience and cost, what are they giving up? Fintech players worldwide have seen the success of Alipay and WeChat pay and their Big Data operations. Being able to sell the purchase patterns of a society more than makes up for the loss in transaction fees. Consumers need to realize just what personal data they may be giving up.
To know that the government has access to the identity of any political donation done thru one of these digital wallet platforms, might give some people pause. It’s here in cases of government and corporate malfeasance where citizens may want to turn to a more decentralized and private mobile currency option — Cryptocurrency.
While the wallet in your pocket may be with you for a few years and the main home of your national ID card, digital identity is on the way, and will soon make a wallet, a piece of yesteryear.
