Consumers are setting the trends in payments with digital wallets becoming their preferred payment choice around the world. That’s according to Worldpay’s ninth Global Payments report, based on a survey of 48,000 consumers in 40 markets.
Digital Wallets accounted for 50% of e-commerce spend in 2023 and are the fastest growing e-commerce payment method with a projected 15% CAGR through to 2027, Worldpay reports. Digital wallets also lead global POS payments, accounting for 30% of spend but projected to hit 46% by 2027.
Payment strategist Dwayne Gefferie said the expansion of digital wallets was driven by the convergence of three waves: e-commerce growth, high adoption of smart phone technology across the world and embedded security.
“Digital wallets combine all three assets. The convergence of technology drives digital wallet adoption,” he said.
However, the move to digital wallets is card-backed, especially in card-dominated markets like the UK and US, Worldpay found. Here, consumers are shifting their card spend to digital wallets like Apple Pay, Google Pay and PayPal; whereas in Asia, where digital wallets are well established, QR code payments have driven mass consumer adoption of digital payments and digital wallet use.
“In Asia, Alipay has linked the whole payments eco-system to an app but for the UK it’s a challenge because the market is so intrinsically linked to card,” said Pete Wickes, EMEA general manager of enterprise at Worldpay.
Worldpay’s report said there was a further trend for Account-to-Account (A2A) payments in emerging markets, including Brazil and India, where they have strong government and bank support. A2A is also dominant for e-commerce spend in Poland and the Netherlands, accounting for 68% and 64% of transactions respectively. But A2A payments have had less success in card heavy markets like the UK and US. While merchants appreciate the lower cost of payment acceptance that A2A provides, it will be harder for customers in the UK to break their card habit and consumers will need incentivising, Worldpay suggests.
“You have to show people a different way of paying and why it’s beneficial,” said Gefferie.
“Trust in new payment methods will take longer in the UK,” agreed Wickes, revealing A2A payments accounted for 7% of UK e-commerce transactions and that they made sense for larger purchases such as cars or for gaming and gambling where credit card payments are disallowed.
BNPL (Buy Now Pay Later) has risen to account for 5% of global e-commerce spend, as consumers find different ways to manage their money during a period of economic crisis, Worldpay reports.
Banks big tech, retailers and regulators have brought BNPL into the credit mainstream with global BNPL transaction values up 18% YOY from 2022-2022 and with a projected 9% CAGR through to 2027, equivalent to overall e-commerce growth.
In the UK, meanwhile, BNPL accounted for 7% of e-commerce transaction value in 2023 and is projected to grow at 4% CAGR to 2027, maintaining a 7% share of e-commerce value.
Global e-commerce is growing at twice the rate of global POS value, the report shows. It achieved 14.4% of all commerce globally in 2023 ($6.1 trillion+) and is forecast to exceed 17% by 2027.
Looking ahead, there will be a shift from companies dictating the way people pay, said Gefferie. “Digital wallets hit all of the boxes for consumers but there will be more innovation that focuses on how people want to pay,” he said. Gefferie suggested increased collaboration with Apple and Google could open up A2A payments, for example.
James Fry, head of strategic expansion at Worldpay, agreed there was a need to drive innovation with new payment technologies.
Education is also required to build trust and educate people about the different ways they can pay, he said.
There must be ubiquity across payment channels and a focus on loyalty and the benefits of A2A and BNPL, for example, Fry added.
