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Digital Wallets Gain Ground as a Popular Online Payment Method Globally

Technology is reshaping the way we make purchases and payments, both online and offline. Buyers around the world are increasingly embracing various channels for shopping, from in-store to online and even through social media. As these purchase channels expand, the adoption of digital payment methods is on the rise. Modern consumers are enthusiastic about innovative payment methods such as digital wallets, Buy Now Pay Later (BNPL), Account-to-Account (A2A) payments, and instant payments. They are moving away from traditional payment options like cards and cash for online transactions. As a result, the transaction value of contactless payments is projected to approach EUR 10 trillion by 2027, as reported in our latest publication, “Europe Online Payment Methods 2023.”

Changing Consumer Expectations

The changing landscape of online purchase channels and payment methods is also altering consumer expectations. Today, consumers expect a seamless payment checkout process. In fact, over two-thirds of surveyed adults indicated that they would abandon a purchase if their preferred payment method was not available as of June 2022.

Digital Wallets vs. Traditional Methods

While consumers are increasingly favoring advanced contactless payment methods, traditional payment methods like credit and debit cards still hold their ground. In June 2022, more than three-quarters of surveyed adults found bank payments to be the most accessible online payment method, while digital wallets were accessible to 50% of the global respondents.

Moreover, more than one-third of consumers in the Europe, Middle East, and Africa (EMEA) region claimed that digital wallets provided a higher level of security. This percentage increased in North America and Latin America as of April 2023.

When asked about their preferred payment method for online shopping, nearly half of surveyed respondents leaned towards digital wallets, although the majority still preferred credit and debit cards in October 2022. This trend was consistent in Europe, where more than two-thirds of respondents used cash and debit cards as a payment method at least five times a month as of September 2022. However, more than half of the surveyed respondents expressed a willingness to use digital wallets.

Regional Variations in Digital Wallet Adoption

The adoption of digital wallets exhibits different growth patterns across Europe. The UK still heavily relies on card-based payments, while consumers in Germany, Spain, and France prefer PayPal. Additionally, local players, such as iDEAL in the Netherlands and Swish in Sweden, are gaining ground.

Advantages of Digital Wallets

Consumers worldwide prefer digital wallets for their speed, convenience, and security. The most commonly used digital wallets for online payments are PayPal and Apple Pay. In the UK, for example, nearly half of surveyed smartphone users preferred Apple Pay, followed by Google Pay and PayPal as of September 2022. In Germany, PayPal stood out, with close to three-quarters of respondents using it as their online payment method in June 2022. Apple Pay and Google Pay had lower usage rates in Germany, though Apple Pay users used the service more frequently on a daily and weekly basis compared to PayPal users.

In France, PayPal was the most used and preferred online payment method, second only to credit cards as of April 2022. In the Netherlands, the homegrown iDEAL was favored by online shoppers. Similarly, in Denmark, the local digital wallet solution, Mobile Pay, was the most used online payment method for about three-quarters of online shoppers. In all these cases, the usage of Apple Pay and Google Pay was comparatively lower.

In conclusion, consumers worldwide are gradually moving away from traditional online payment methods, such as card payments or cash on delivery, in favor of contactless payment methods like QR code payments, digital wallets, BNPL, A2A payments, and more. Digital wallets offer the speed, convenience, and security that modern shoppers desire, making them a preferred choice for online transactions.