Singapore: One in two people will use mobile wallets by 2025, according to a new report from Boku – a fintech. Over 2.8 billion mobile wallets were in use in 2020. There will be 4.8 billion mobile wallets in use by 2025 end with nearly 74% growth, the report projected. That is nearly 60% of the world’s population.
Southeast Asia, Latin America, and Africa and the Middle East are the fastest-growing markets, where mobile wallets are displacing cash and cards for more convenient digital payments.
“Southeast Asia is one of the most rapidly digitalising regions in the world. In 2020, the region added 400 million new internet users, with 70% of the region now online. Together with consumption trends brought about due to lockdowns during the pandemic, that has led to a familiarity with e-Commerce and an exponential rise in mobile wallet use,” said Loke Hwee Wong, VP and GM – APAC, Boku.
“This is also because the region was heavily dependent on cash and bank transfer before mobile wallet use, and the convenience and accessibility, especially with stored value mobile wallets, will see Southeast Asia leapfrog the rest of the world in mobile payment adoption,” added Wong.
The 2021 Mobile Wallets report released by Boku in partnership with Juniper Research provides insights into mobile wallet adoption and its use in markets globally. Some of the key findings of this report are :
- Southeast Asia is the fastest growing mobile wallet region
Mobile wallet use will grow by 311% between 2020-2025, reaching up 439.7 million wallets in use across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam from 141.1 million in 2020. The rise in e-commerce and dominance of super-apps like Grab and Gojek, particularly in markets like the Philippines and Indonesia, is driving accelerated mobile wallet adoption.
- China reaches maturity but Japan, Korea and Taiwan set for hyper-growth
The Far East and China continues to be the largest mobile wallet region in the world with 1.34bn users in 2020. Market saturation is resulting in slowing growth in China with a CAGR of just 2.2% per year. Meanwhile, markets including Japan, Korea and Taiwan will continue to see accelerated adoption of mobile wallets with 98.4% market penetration by 2025.
- Africa and Middle East is the second biggest mobile wallet market
The second biggest mobile wallet market will grow 147% between 2020-2025. This is driven by expanded usage of mobile money services such as M-Pesa which are increasingly offering additional services such as access to e-Commerce.
- Latin American growth is being supercharged by e-commerce
This region will increase mobile wallet use by 166% between 2020-2025. Long held back by consumers’ preference for cash-based payments and comparatively lower smartphone penetration, this is fast changing, and the region’s e-commerce growth is supercharging mobile wallet use.
- Slow growth in Western Europe and North America
With 65% growth in Western Europe and 50% in North America by 2025, these regions will see the least amount of mobile wallet growth in the next five years. However, markets such as the UK are seeing a rise in card-based mobile wallets due to the adoption of contactless spurred on by the pandemic and shift towards cashlessness.
Card-based and stored value-based are two main types of mobile wallets being in use globally. Card-based mobile wallets include the likes of Apple Pay and Google Pay, which provide an easier way to pay with cards people already have.
And stored value based includes the likes of AliPay and GrabPay that enable consumers to transact with digital cash and are popular in emerging markets with fast-growing e-commerce sectors.
“The markets that are set to grow the fastest are those with the lowest levels of card penetration, stored value wallets are thriving,” said Adam Lee, Chief Product Officer – Boku.
“In North America and Western Europe, which are dominated by card-based mobile wallets, we are seeing the slowest growth in mobile wallet adoption, as the technology provides merely incremental benefit,” added Lee.
“We are seeing a clear bifurcation in the market between card-based mobile wallets in developed markets and stored value wallets that are ubiquitous in Asia and rapidly growing in all emerging markets,” pointed out Lee.
This growth and bifurcation in the use of digital payments present both an opportunity and challenge for merchants. The mobile wallets number transacting over $1 billion annually will grow by 27% from 54 wallets in 2020 to 69 wallets by 2025.
This provides a lucrative opportunity for merchants looking to acquire valuable customers, many of whom only use mobile wallets. However, not only are consumers using mobile wallets more, they are using more mobile wallets.
Consumers in high growth markets such as India and Indonesia use an average of 2.74 wallets. This means that not only do merchants need to accept them but also to ensure broad coverage across each target market.
“We are witnessing a paradigm shift in payments driven by mobile wallets. They have lowered the barrier to making digital payments and in parallel ushered billions of new consumers into e-commerce. These consumers are not in North America or Western Europe, they are in emerging markets, and while they don’t have credit cards, they overwhelmingly have mobile wallets,” said Jon Prideaux, CEO – Boku.
“For global merchants, mobile payment acceptance is not about accepting one type of mobile wallet or another, but ensuring that consumers in every market will have the required selection on payment types in order to monetize transactions,” concluded Prideaux.