monopolybingo| Digital wallets are growing strongly, giving a glance at the global payment landscape! What changes will there be in the future?

editor2024-05-26 14:39:253Academia

In recent yearsMonopolybingoTriggered by digital innovationMonopolybingoA variety of new payment types emerge in endlessly, in human history, consumers have more payment choices than ever before.

"in 2023, digital wallets will still be the preferred method of payment for consumers, with spending in all channels totaling $14 trillion." According to the 2024 Global payment report (hereinafter referred to as "the report") released by global payment solutions company Worldpay, digital wallet has become the main payment choice for consumers. In 2023, digital wallets accounted for 50% of global e-commerce consumption and 30% of global point-of-sale consumption. In the future, digital wallet will still be the fastest growing method of payment.

In addition, among the emerging global payment methods, account-to-account payment (A2A) and buy-and-pay (BNPL) also show considerable potential for development, and the global payment pattern is still changing.

Digital wallet is growing strongly all over the world

It accounted for 50% of global e-commerce transactions in 2023, according to the report. Digital wallet is the fastest growing e-commerce payment method, with an average compound annual growth rate of 15% by 2027. The report predicts that the volume of e-commerce transactions paid directly by credit and debit cards will decline slightly by 2027. However, this "decline" is largely due to the transformation of direct consumer spending on bank cards into that of digital wallets.

At the point of sale, in 2023, digital wallet will further expand its lead in the global point of sale, accounting for about 30% of the global point of sale transaction volume, more than 10%.Monopolybingo.8 trillion dollars. At the same time, digital wallet is also the fastest growing payment method at the point of sale, and its compound annual growth rate is expected to be as high as 16% by 2027.

In the global payment market, China is the world's largest digital wallet market. Digital wallet brands Alipay and WeChat Pay and bank card organization UnionPay lead the Chinese payment market.

According to the above report, digital wallets accounted for 82 per cent of e-commerce transactions in 2023 and accounted for nearly 2/3 (66 per cent) of point-of-sale consumption. What is more noteworthy is that even though digital wallet has gained a dominant position in e-commerce and point-of-sale in China, it is still the fastest-growing method of payment. In the e-commerce market, the compound annual growth rate of digital wallets is expected to reach 13% from 2023 to 2027, accounting for 86% of total consumption.

By comparison, credit cards are still largely preferred by American consumers in 2023, but digital wallets will also become the fastest-growing online and offline payment method in the United States in the future.

According to the report, according to available data, credit, debit and prepaid cards in the United States accounted for 71% of total consumption in 2023. The report predicts that in 2027, digital wallets will account for 52% of e-commerce payments in the United States and 31% at the point of sale, compared with 22% and 34% for credit cards in the above two channels.

Unlike the US market, the report shows that digital wallets lead the European e-commerce payment market, especially in Denmark, Germany, Italy, Spain and the UK, which are dominant in five markets. Global digital wallet brands Amazon Pay, Apple Pay, Google Wallet and PayPal are the main participants in European digital payments.

The report predicts that in the European market, digital wallets will account for 30% of e-commerce transactions in 2023, and its compound annual growth rate is expected to reach 17% by 2027, when digital wallets will account for 40% of e-commerce transactions.

Digital wallets are becoming more and more popular at European points of sale. The report shows that bank cards have dominated the European payment market for decades, and the bank card system is mature and stable and has become a resistance to change. However, as more businesses are willing to accept digital wallets, and more and more consumers use this convenient payment method, the popularity of digital wallets is accelerating. Digital wallet usage at points of sale is expected to grow at a compound annual growth rate of 24 per cent by 2027, more than doubling from 13 per cent in 2023 to 27 per cent in 2027.

Bank cards still have a strong influence.

People often ask such a question: the market share of bank cards is being swallowed up by digital wallets. Does the influence of bank cards decline as a result?

The answer to such a question given in the above report is no. Bank cards remain strong in global payment methods as market share shifts to digital wallets, the report said. This is because it seems that the consumption of bank cards is decreasing, but in fact they are only replaced with new equipment of digital wallets, either by "direct payment" or by "installment". In a survey, Worldpay found that the main source of funding for consumers' digital wallets is still the combination of credit and debit cards embedded in digital wallets, which is not fundamentally different from using physical cards instead of digital wallets.

The report predicts that bank cards are expected to remain influential for many years to come and remain dominant in many markets.

Although the current bank card occupies a high market share of the payment market, the United States is also innovating the financial infrastructure of the real-time payment system. In July last year, the Fed launched the real-time payment system "FedNow" to support the modernization of the US payment system, which can be registered and used by major banks and credit unions.

However, this real-time payment system takes time to deposit. It may take several years for FedNow to really affect consumers, the report said. The process for banks to adopt the Fed's new real-time payment service has not been smooth, and they are still grappling with the challenges of real-time payments, such as how to reduce fraud.

Emerging payment methods can not be ignored

In addition, among the emerging global payment methods, account-to-account (A2A) payment and buy-and-pay (BNPL) show considerable potential for development.

It is understood that account-to-account (A2A) payment is a kind of electronic payment that does not need to be made directly from one side to the other through the card network. A2A has been embedded in a variety of applications and online services, such as Pix in Brazil, iDEAL in the Netherlands, and BLIK in Poland. A2A payments include bank transfers (initiating payments) and direct debits (direct deductions).

In 2023, account-to-account payments accounted for at least 30% of transactions in the e-commerce market in some European countries such as the Netherlands, as well as Malaysia, Thailand and Nigeria, according to the report.

E-commerce payment method in Europe

Under the influence of the common supervision of the European Union, the payment pattern of e-commerce in Europe is very diversified. In the European market surveyed by Worldpay, credit card, debit card, account-to-account (A2A) payment and digital wallet are among the leading payment methods in at least two markets, according to the report.

Although, as mentioned earlier, in the European market, digital wallets also lead the European e-commerce payment market, in terms of emerging payment innovation, this region shows a variety of characteristics, and all kinds of payment methods are likely to be successful. it is difficult for one payment method to monopolize the market.

For example, in terms of emerging payment methods, account-to-account (A2A) payments led Finland, the Netherlands, Norway, Poland and Sweden in 2023. A2A payments are particularly dominant in the Netherlands and Poland. A2A payments accounted for 18% of European e-commerce transactions in 2023.

monopolybingo| Digital wallets are growing strongly, giving a glance at the global payment landscape! What changes will there be in the future?

In Sweden, for example, driven by Swish, a domestic banking service, account-to-account (A2A) payment has become the preferred online payment method in 2023, accounting for 30% of e-commerce transactions; buy-and-pay (BNPL) is favored by Swedish consumers. As the hometown of Klarna, the global leader of buy and pay (BNPL), Sweden's BNPL accounted for 21% of e-commerce transactions in 2023, with the highest utilization rate in the world (on a par with Germany).

In Latin America, Latin America had the highest penetration rate of A2A payments in the world in 2023, accounting for 20% of regional e-commerce transactions. The great success of Pix, a Brazilian real-time payment system, has contributed to the rise of online account-to-account (A2A) payments in Latin America. In 2023, A2A payment became the second most popular online payment method in Brazil, accounting for 30% of Prida's transaction volume, with the highest penetration rate in the region.

However, the report also points out that due to the slow progress in promoting the open banking agreement so far and the need to re-evaluate and revise, A2A payments are expected to grow slowly, accounting for only 19 per cent by 2027. At the same time, account-to-account (A2A) payments still face challenges in the bank card-dominated market.

Compared with digital wallets, credit cards and A2A payments, buy-and-pay accounts for a relatively low proportion of global transactions, accounting for about 5% of global e-commerce transactions in 2023.

"Buy first and pay later is actually a popular concept in recent years, because it can give payment to ordinary consumers like some kind of credit product. These consumers may not be able to get a credit card line at the bank, but they can buy and pay first and then give him a certain amount to use, and at the same time stimulate his consumption, because it provides him with more payment options. " Shi Nanfei, general manager of Worldpay China, said that buy-and-pay can be understood as a payment credit product, but it will be strongly regulated by financial regulators.

In China, the mainstream brands of buy-and-pay mode include Ant Huabai, JD.com Bailiao and so on. According to the report, buy-and-pay is expected to grow further in China's e-commerce market, accounting for 5% of the transaction volume by 2027, which may exceed the direct use of credit cards (4%) and debit cards (3%).

"with the rise of emerging payment, there are many ways of expression, and mobile payment is the most important feature. it not only attracts extensive social attention, but also has a profound impact on people's daily life and work, and has a great impact on the traditional way of payment. so that banking financial institutions compete for reform and transformation." Summary of the report.

Cash transactions are shrinking, but they are still attractive

If you look at the amount of cash transactions and market share, there is no doubt that cash transactions will be shrinking in the next few years.

The report shows that globally, cash transactions have increased from 6. 6 percent in 2022Monopolybingo$.7 trillion fell to $6.1 trillion in 2023, down 8 per cent from a year earlier. Moreover, the report predicts that the global cash transaction volume will maintain a compound annual growth rate of-6% by 2027, when the global cash transaction volume at the point of sale will be $4.7 trillion, accounting for 11% of the total, down from 16% in 2023.

In 2023, in 12 of the 40 markets surveyed in the above report, cash is still the main method of payment for point-of-sale transactions, such as Argentina, Colombia, Japan and other countries and regions. Correspondingly, the proportion of cash transactions at the point of sale in Australia, Canada, China, Denmark, Finland, the Netherlands, New Zealand, Norway and Sweden is less than 10%.

However, cash is deformed and diverse, and it is still an important payment tool for billions of consumers around the world. The report shows that in many markets, lower-income consumers prefer to use cash for transactions because they do not have access to banking services or have access to only a small amount of banking services. Cash remains attractive in the face of economic uncertainty.

Editor-in-chief: Yang Yucheng