An e-wallet may prove challenging to define. To begin with, they go by numerous names. In addition to being called e-wallets, they are also referred to as mobile wallets, digital wallets, value-stored facilities, purchased payment facilities, and facilities for the storage of value. Additionally, their meaning and application vary from region to country. Since Apple Pay does not really store any actual currency, it is not regarded as an e-wallet in several regions. As opposed to e-wallets like Skrill, where customers preload money like a gift card. The emergence of cryptocurrencies, which depend on digital wallets to store their coins, has also added to the complexity.
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But one thing is certain. All incarnations of e-wallets have become a firmly established part of the world of payments. Digital wallets accounted for 48.6% of worldwide e-commerce transaction value in 2021. It is a little over US$2.6 trillion. In 2025, this percentage is expected to increase to 52.5% of the transaction value. For point-of-sale (POS) transactions, the situation is similar. In 2021, the percentage of e-wallets in all POS transactions increased by over 21% YoY, accounting for 28.6% of the total value of POS transactions, or more than US$13.3 trillion. By 2025, that is anticipated to increase to 38.6% share (more than US$22.7tn).
In this article, we will look at the factors influencing that uptake, the functions that e-wallets serve in people’s financial life around the world, and the prospects for both e-wallet sellers and consumers in the future.
Overview of the US Perspective
The card still reigns supreme when it involves POS transactions, despite the fact that the use of mobile wallets is growing in the US. E-wallets accounted for only 11% of purchases made at POS in 2021, compared to an aggregate total of 70% combined credit, debit, and charge cards. But by 2025, the market share for e-wallets at POS terminals is predicted to rise to about 15%, primarily at the expense of cash.
E-wallet use online is rapidly increasing and is roughly equal to card usage. Each contributes about 30% to the transaction share. A third of the marketplace is predicted to be occupied by this trend by 2024, thanks to the adoption of “pass-through” mobile wallets like Google Pay, Apple Pay, and others. Pass-through mobile wallets are those that also hold cards.
The Biggest Competitors in the US
There are several different types of wallets available in the US e-wallet market.
With 36% of users using PayPal as their main wallet, it is the most popular e-wallet and can function as both a stored value and non-stored value wallet because it can be linked directly to a bank card or merely filled up.
Apple Pay, a non-stored value, a pass-through wallet that 20% of e-wallet users use as their main wallet, is the second most popular e-wallet in contrast.
Venmo (16%), which functions similarly to PayPal, is the third most popular.
What to Watch Out for Regarding the US: Congress Monitoring
The US Congress has recently been paying a lot of attention to e-wallets.
Congress convened a hearing in April 2022 titled “What’s in your digital wallet?” The hearing focused on consumer safeguards in online payments and considered the possibility of helping Americans without bank accounts by providing them with e-cash or stablecoin. Since then, the discussion has continued, however, as of August 2022, no resolution has been reached.
Overview of the European Perspective
The usage of e-wallets is expanding throughout Europe, and in the five biggest e-commerce markets in the continent— Germany, the UK, France, Russia, and Spain—it has surpassed all other payment methods. E-wallets comprised 26.7% of the value of online transactions on the continent in 2021. This dominance is anticipated to increase as e-wallets are predicted to represent up to 30% of European e-commerce transactions by 2024.
Cash was still frequently utilized on the continent before the pandemic. In accordance with Global World Pay, cash accounted for 40.2% of POS purchases in 2019. It had decreased to 25.6% by 2021. E-wallets benefited greatly from this, and in the year 2021, they represented 7.7% of POS spending. By 2025, it is expected that this percentage will nearly quadruple.
The Biggest Competitors in Europe
In general, PayPal is the most popular e-wallet in the continent, but Google Pay and Apple Pay are also widely used. There are some services that are increasingly gaining popularity among the client base in the “Old Continent” and are expected to become truly serious market contenders: For instance, MuchBetter, which is established only 6 years ago, has gained a lot of traction among gamers and bettors in Europe as it offers quick transactions and low fees, which is very important when using sportsbooks at the site that introduced MuchBetter as a payment option. This way it assists in developing the market size of online gambling in the continent, which is predicted to reach USD$ 47.11 billion, based on Mordor Intelligence analysis.
There are numerous regional variations and local players, though. These include Swish in Sweden, iDEAL in the Netherlands, and YooMoney and Qiwi in Russia.
What to Watch Out for Regarding Europe
- Some Areas Are Still Ruled by Cash
When it comes to payment methods, there are significant differences throughout the continent.
In Norway, cash accounted for 4% of POS transactions in 2021. It stood at 47.1% in Spain. Any e-wallet company that can break into the cash-heavy markets is bound for success.
- EU Legislators Want to Regulate Cryptocurrency Wallets
In July 2022, EU legislators approved an array of compliance guidelines for cryptocurrency service providers in an effort to reduce the use of cryptocurrencies for laundering money and terrorism.
The rules are similar to the “travel rule” of the EU, which already governs traditional finance and specifies that data about the origin of the possession and its beneficiary must be stored on each side of the transfer and travel with the transaction. Both “cold” and “hot” wallet holders will be impacted, however, how this will actually operate in practice is still unknown.
Overview of the UK Perspective
With only a tiny proportion of non-digital buyers, the UK’s mobile and online commerce business is the most developed in all of Europe. Because of this, we decided to write a separate section in the article about it. As a result, in the UK, e-wallets have replaced credit cards as the primary means of online payment since 2020. Most significant merchants also accept payments through Google Pay, PayPal, and Apple Pay. Currently, just over one-third of UK consumers use a digital wallet, and as of 2021, 32% of the total e-commerce spending was made using e-wallets. World Pay Global predicts that by 2025, this will increase to 34.5%.
The majority of POS transactions are still made with debit cards (45%), credit cards (28%), and cash (11%), with e-wallets trailing behind with only about 9% of all transactions.
The Biggest Competitors in the UK
According to one report, Apple Pay has a 46% market share in the UK, making it the country’s biggest e-wallet provider.
With 41% of the market, PayPal continues to have a solid position.
Google Pay and Samsung Pay, two other mobile wallets, account for the remaining 3 and 9%, respectively.
What to Watch Out for Regarding the UK
- Spenders Considered Young(er) Are Heading the Way
Most people do not utilize e-wallets as much as Gen-Z and Millennials do, with 64% of those in the 18- to 34-year-old demographic doing so. Among people aged 54 to 65, that figure reduces to just 18%.
As members of Generation Alpha (those born following 2010) reach purchasing age, usage is likely to rise even more.
- The UK Will Become a Hub for the Development of Crypto Assets
The UK government declared plans to include stablecoins—a type of cryptocurrency asset often indexed to a fiat currency—within the nation’s payment legislation in June 2022.
The growing acceptance of stablecoins and other forms of cryptocurrency could give e-wallet operators more opportunities to contact new customers.
Overview of the Asian Perspective
Asia was the very first continent in the entire globe where the usage of e-wallets proliferated, and this trend does not appear to be slowing down, particularly when it pertains to making online purchases. In 2021, 68.5% of all internet-based APAC transaction value was made with e-wallets. By 2025, this is anticipated to increase to almost 72%, or more than US$3.1 trillion.
The massive penetration of e-wallet payments in China, where they accounted for approximately 83% of the value of e-commerce transaction value in 2021, is the main driver of this development. Despite being substantially smaller, the figures from India (45.4%), Indonesia (38.8%), and the Philippines (30.5%) are nevertheless excellent.
E-wallets are the most popular POS payment method throughout the region. A disproportionate amount of this is centered in China, where e-wallets beat all other POS techniques and will account for 51% of the value of translation in 2021. The rationale behind this is the now-ubiquitous use of QR codes for purchases through the two most popular mobile wallets, Alipay and WeChat Pay. India has the second-highest POS e-wallet penetration in the area. Less than half of China’s POS transaction value, or 24.8%, was made up there in 2021.
The Biggest Competitors in Asia
Although there are many e-wallet providers in the area, super applications are the dominating players (more detail about this later).
Alipay or WeChat in China, Gojek in Indonesia, Grab in Singapore, PhonePe and Paytm in India, and KakaoTalk in South Korea are a few of these.
What to Watch Out for Regarding in Asia: The Onset of Super Applications
As previously indicated, practically all of Asia’s leading e-wallet providers are super applications. These apps are capable of doing a wide range of tasks, including social media, online shopping, ride-hailing, banking, games, and news. Plenty of these apps began as payment apps, including Paytm in India and Alipay in China.
Their expansion can be largely attributed to the region’s higher-than-average percentage of unbanked residents relative to mobile phone owners; 20% of Chinese nationals were unbanked as of 2021 (compared to 7% in the US), while over 60% of people in certain neighboring nations, such as the Philippines and Vietnam, were unbanked. These numbers were significantly higher in the middle of the 2010s when the applications that eventually evolved into super-apps first started accepting payments.
Mobile phone usage, on the other hand, has long been high and has been increasing. As a result of their ability to consolidate such a sizable percentage of consumers’ expenditures, providers were able to quickly increase their market share.
Overview of the Australian Perspective
Although the Australian e-wallet sector is expanding, online credit cards continue to dominate. They represented over a third of the value of e-commerce payments in 2021. E-wallets, on the other hand, made up 25%. However, according to Global World Pay, e-wallets will overtake credit cards as the preferred payment method by 2024.
Only 11% of the total payment value for POS sale transactions was made using an e-wallet. Through 2025, a 5% CAGR is predicted for this.
The Biggest Competitors in Australia
In Australia, PayPal continues to be the most popular e-wallet. But there is also widespread use of Apple Pay, Google Pay, and Samsung Pay.
WeChat from China is also widely utilized in Australia, where there are more than 600,000 people of Chinese descent.
What to Watch Out for Regarding in Australia
- Coming soon: QR Codes
In order to allow smooth payment journeys across e-commerce, mobile, and point of sale, it was revealed that Australia’s EFTPOS national debit card system would introduce a QR code-enabled mobile payments and incentives network late in 2021. This is currently being tested in shops all around the nation.
In China and the US, QR code point-of-sale transactions have been extremely successful.
- The Regulatory Environment Is About to Change
The Australian government’s “Transforming Australia’s Payments System” plan was made public at the end of 2021 after over two years of talks by the Parliamentary Joint Committee on Corporations and Financial Services. E-wallets were thoroughly covered, and the reporting noted the rapid growth of all different kinds of digital wallets.
The Australian government has stated that it intends to amend all current payment regulations over the course of 2022 and 2023 and to develop a functional regulatory framework that offers consumer protections. The government has also stated that it will further examine the issues of de-banking and mainstream banks’ refusal to cooperate with FinTech.
What Comes Next for E-wallets?
What is yet unknown is the manner in which e-wallets will be utilized as the world of digital payments changes over the ensuing years. One of the payment options with the quickest growth is Buy Now, Pay Later (BNPL), particularly in Europe and the UK. There is considerable overlap between the two payment options already because PayPal offers credit and just launched Pay in 3, which is similar to one of Klarna’s core offerings. Apple has also made plans to introduce Apple Pay Later, a BNPL of its own.
As embedded finance is more widely used, this overlap will probably only get more. One survey found that 75% of merchants in the UK, Germany, and Belgium use integrated finance for providing financial products such as cards, BNPL programs, and loyalty benefits, and 56% expect to add more in the near future. These businesses will be able to provide e-wallet services thanks to embedded finance.
All of this raises the question of whether the super-app will spread throughout the world. The proposal has previously been put out by numerous multinational firms, including Walmart and Amazon. Additionally, analysts forecast that by the end of 2022, there will be about 1 billion Bitcoin users worldwide. And they will all require digital wallets.
E-wallets are now a recognized component of the global payment environment, that much is certain. The use of e-wallets is increasing everywhere, and as the world comes closer to a cashless society and they continue to offer financial services to those without bank accounts (who are thought to make up about 24% of people worldwide), this trend will only accelerate.
