Expanding mobile wallet market projected to surpass $3.5 trillion by 2023, suggests research report
Mobile Wallet Market Booms in Western Countries
The mobile wallet market has witnessed significant growth in 2023, with adoption accelerating rapidly in Western countries. This surge is attributed to increasing smartphone penetration, enhanced security features, and evolving consumer preferences for convenient, contactless payments.
According to a report by Finaria, the digital payments market experienced impressive growth in the last year, with both the number of users and transaction value increasing due to the COVID-19 pandemic. The U.S. mobile payments market is projected to grow by 49% to $698 billion by 2023.
Key players in the mobile payment market include Apple Pay, Google Wallet, WeChat Pay, and Alipay. Earlier this week, PayPal acquired Curv to expand into cryptocurrencies and digital assets, further building on the company's strategy to expand its digital wallet capabilities to buy, sell, and hold cryptocurrency.
The mobile wallet market size is expanding rapidly with a compound annual growth rate (CAGR) of around 32% to 38%. In North America, 85% of consumers are expected to use a mobile wallet at least once by 2025, showing strong trust and convenience in digital payments.
Smartphone penetration, with over 6.9 billion users worldwide, has been a crucial driver, enabling frictionless transactions via apps, QR codes, and NFC (near-field communication) technology. The integration of biometric authentication, such as fingerprint and facial recognition, has increased to over 50% adoption by 2025, contributing significantly to consumer confidence and ease of use.
The rise of in-app payments and smartphone-friendly interfaces has contributed to transaction volume growth. In-app payments accounted for 66% of mobile wallet transactions globally by 2025, reflecting user preference for seamless, integrated shopping experiences prevalent in Western retail.
Western consumer behavior has shifted toward digital payments, with mobile wallets often used alongside credit/debit cards. Digital wallet users tend to spend more overall compared to debit or cash users, incentivizing retailers and payment providers to promote adoption. Ecommerce growth and innovations such as Amazon’s mobile-only platform and TikTok’s livestream ecommerce launch in the US have further spurred mobile wallet utilization by facilitating easy digital purchases.
However, an April 2020 report from PYMNTS.com indicated that consumers weren't using mobile wallet apps as much as expected, early in the COVID-19 pandemic. Despite this initial slow adoption, the mobile wallet industry is estimated to reach $2.4 trillion in 2021, a 24% increase from last year. The U.S. mobile payments market is the second-largest at $465.1 billion worth of transactions.
The average value for mobile point-of-sale transactions in 2021 is $1,670, a 25% increase from 2019. A January 2020 Blackhawk Network report showed that only half of retailers accepted mobile payments in 2018, but 60% of customers surveyed wanted to buy goods in-store using their smartphone and accrued loyalty points. In December, 7-Eleven debuted a mobile wallet that lets consumers make contactless payments at select locations.
An August survey from the National Retail Federation found that retailers are increasingly accepting contactless payments and expect greater adoption of the technology in the future. China's infrastructure facilitated the rapid adoption of mobile payments, while credit and debit cards never gained significant traction. The mobile wallet industry is forecasted to reach $3.5 trillion by 2023.
In conclusion, the mobile wallet market in Western countries has grown robustly in 2023, fueled by smartphone ubiquity, enhanced security measures, retail ecosystem integration, and evolving consumer habits favoring digital, contactless payments. Although initial adoption was slower than expected, the market is projected to continue its rapid growth in the coming years.
- AI-powered technologies are playing a crucial role in the enhancement of mobile wallet security features, increasing consumer trust and confidence in using digital payments.
- The integration of AI and fintech is revolutionizing the finance industry, as companies like PayPal are expanding into cryptocurrencies and digital assets to enhance their digital wallet capabilities.
- As the pandemic continues to drive consumers towards contactless payments, space economy startups are exploring the potential of integrating mobile wallets for micropayments in space-based commerce.
- The mobile wallet industry's rapid growth is not limited to finance and retail; it's also affecting the broader business landscape, with many industries adopting mobile payments for streamlined transactions.
- In addition to mobile wallets, AI is also transforming the space industry, with AI-driven systems providing efficient management of resources, automating decision-making, and enabling safer space missions.
