Spending via digital wallets will exceed $10 trillion in 2025, up from $5.5 trillion in 2020. This dramatic 83% growth in spend will be fuelled by the heightened adoption of digital payments during the pandemic.
Digital wallets, where payment details are stored and accessed via a single application, have proven themselves as being both convenient and secure during this difficult period; acting as a platform for future growth, finds the : Digital Wallets ~ Transforming the Way We Pay? report from Juniper Research.
The report identified that wallets are becoming increasingly capable of both contactless and remote payments. The research forecasts that in 2025, contactless and ecommerce payments will account for 50% of total wallet spend, from just under 36% in 2020; making these the high-priority areas where wallet providers need to maximise their merchant networks.
Acceptance remains merchants’ biggest challenge
Separate research from Juniper – Digital Wallets: Key Opportunities, Vendor Analysis and Market Forecasts 2021-2025 – finds that the rapid growth in digital wallets’ availability, coupled with rising adoption, has left merchants with difficult decisions around acceptance.
The report identified integration costs for multiple wallets as challenging for merchants; meaning that picking the right wallets to focus on is highly important.
Research co-author Alexandria Sadler explains: “Merchants must base their payment strategies around wallet acceptance in order to support a digitally-engaged addressable market, but must also judge the right wallets to target, or they will be lumbered with increased costs and limited benefits.”
Contactless payments seeding greater wallet use
The research also found that the increased use of contactless mobile payments during the pandemic, prompted by concerns around cash, has seeded greater wallet use across the payments’ ecosystem.
The report forecasts that contactless adoption will rise, with over 34% of mobile handsets set to use contactless payments in 2025, up from 11% in 2020. This growth means integrating contactless-enabled wallets within checkout processes will be critical to meeting changing user expectations.