Everyone is using digital wallets. The latest numbers reveal that 3.4 billion people use digital wallets in 2023. That number should increase to 5.2 billion by 2026. Below, we’ll talk you through why so many people use them.
Digital Wallet Growth
One of the main reasons digital wallets like a web3 wallet have become so popular is their unmatched convenience. It’s no secret we all want speed and efficiency with our money, and that’s precisely what digital wallets give us. There’s no need to spend time looking for cards, putting card details in, and generally getting agitated when you can’t find your card and your shopping cart is ticking.
According to Statista (2023), convenience was identified as the most significant factor behind the uptake of digital wallets by 72% of respondents in a survey.
They simplify online and offline shopping experiences by storing different payment modes, loyalty cards, and even tickets, enabling customers to complete transactions instantly. And if it isn’t instantly, it typically isn’t the digital wallet issue.
Biometric authentication, like facial recognition or fingerprints, also helps give additional security measures.
Why People Trust Digital Wallets
Security is up there with the top reason. With an increase in cyber threats, consumers are worried about their financial data – and rightly so. Developers of these wallets have created the most enhanced security features, minimizing fraud risks through unauthorized operations.
Here’s how they’ve done it:
- Tokenization: A unique encrypted token replaces sensitive card data in a digital wallet through tokenization – physical credit card information is never disclosed during payments.
- Two-Factor Authentication (2FA): Some digital wallets require users to confirm their identities using double-factor authentication to provide higher security levels.
- Biometric Security: Using biometrics like fingerprints and facial recognition ensures that only the rightful owner can access the wallet.
According to Juniper Research, these measures have reduced fraud considerably, with digital wallets experiencing 70% fewer fraudulent activities than traditional payment methods. This boosted security has been the major trust builder for consumers.
Market Penetration and Global Adoption
The adoption of global digital wallets has been nothing short of amazing. By the end of 2026, the number of people who use this method will have reached 5.6 billion, representing more than half of the people on Earth.
Here’s more on why global adoption rates are so high:
- Smartphone Penetration: The widespread use of smartphones has made it easier for more people to access digital wallets. The growing incidence of smartphone usage, especially in places like China and Japan, has made digital wallets a preferred means of payment among many citizens there.
- Backing from Major Players: Tech giants such as Apple, Google, and Samsung have put a lot of resources into developing digital wallets, making it easier for people to use them. It was revealed by eMarketer’s report, which stated that Apple Pay, Google Wallet, and Samsung Pay account for more than 60% of the world’s digital wallet market.
- Government Efforts: Governments in some areas have actively supported using digital wallets as part of financial inclusion initiatives. For example, India’s Unified Payments Interface (UPI) has been instrumental in driving digital wallet growth, with over 9 billion transactions recorded alone during October 2023. That number is expected to rise significantly by the end of 2024.
Leading Digital Wallets and Their Market Share
Digital wallets have diversified significantly to meet various consumer needs and regional preferences. The following is a list of some leading ones and their market shares:
- Apple Pay: It leads in North America and Europe with a share of 35%.
- Google Wallet: It dominates globally at around 25%, especially in India and Southeast Asia.
- Samsung Pay: It approximately captures 20% of the market, with many users found mostly in South Korea and other parts of Asia.
- PayPal: It remains one of the world’s leading platforms for online payments, commanding a 15% share of the digital wallet market.
- WeChat Pay and AliPay: Together, they control over 90% of China’s digital wallet sector, making them dominant within this territory.
These are now essential parts of finance, each with something special for different demographics and markets.
The Impact of COVID-19 on Digital Wallet Adoption
Consumer behavior changed after COVID-19 broke out, hastening the adoption curve for digital wallets. As a result, there was an exponential increase in smartphone-based payment systems or mobile wallets. FIS reported that there were global increases in mobile money transfers by nearly a three-decade-high figure (28%) during the pandemic peak year 2020.
That was not just a passing phase. People jumped on the hype and never stopped using digital wallets. A study at the time conducted by Mastercard showed that 74% of consumers plan to continue utilizing mobile wallets beyond the pandemic – it was never going to be a temporary trend and now people can’t live without them.
These developments indicate how billions of people across the globe will rely on digital wallets for their financial transactions forever – there’s no going back now. They have revolutionized and simplified everything we do. A click or two and you can move money or make payments in seconds. It’ll be interesting to see how digital wallets continue to integrate into our lives.