Digital wallet payments have seen a spike in adoption in the UK due to factors including the pandemic and cost-of-living crisis, according to a report by technology payments infrastructure company, FIS.
FIS’s Global Payments Report 2023, which examined consumer payment habits online and in-store across 40 global markets, found that digital wallets are the leading payment method among consumers shopping online in the UK. Mobile wallet payments accounted for 35% of e-commerce transaction value in 2022, rising from 32% in 2021.
GlobalData predicts this trend for increased mobile wallet payments will continue globally, significantly outpacing card payments by 2026.
Digital wallet adoption has been driven by a number of factors including a continuing decline in the use of cash in Western economies, including the UK, since the Covid-19 crisis. Point-of-sale cash transactions in the UK have fallen by half since the pandemic, from 21% in 2019 to 10% in 2022.
At the same time, digital wallet payments in the UK increased in-store as well as online, accounting for 10% of payments in 2022 and will account for a 21% market share by 2026, according to FIS.
GlobalData predicts that global mobile wallet payments will reach $120tn by 2025, growing at a compound annual growth rate of 19.9% between 2021-2025.
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GlobalData’s thematic research 2022 Mobile Payments report reflects the findings of the FIS 2023 Global Payments Report that mobile wallet adoption has increased post-pandemic. But the analyst adds that the growing adoption of digital wallets has been driven by the omnipresence of smartphones.
“The likes of Apple, Google, and Samsung have equipped their smartphones
with digital wallets and the pandemic has accelerated the adoption of digital wallets as consumers favoured convenient contactless solutions as a ‘safe’ alternative to cash payments, which are steadily declining,” according to the report.
The UK e-commerce market was worth $319bn in 2022. Innovative payment methods will be key for businesses in exploiting the full potential this market.
Pete Wickes, EMEA general manager for merchant solutions at FIS, said: “Meeting consumer demand for advanced payments features now can help businesses thrive through economic troubles, while potentially gaining market share from competitors.”