Digital wallet spending across the world is expected to nearly double in five years as the shift to cashless payments continues, according to a new study from Juniper Research.
By 2025, total spend via mobile phones or electronic devices that don’t require the use of cash will exceed $10 trillion, up from $5.5 trillion in 2020.
A growing number of consumers has shifted to electronic payments since the onset of the coronavirus pandemic last year due to the risk of contamination. Over the last several months, merchants and other commercial establishments have seen a decline in the use of cash.
According to Suvo Sarkar, senior executive vice president of Emirates NBD, consumers in the UAE had been increasingly turning to digital payment options prior to the outbreak.
“The ongoing pandemic has further accelerated the change in customer behaviour, led by health-related concerns, as well as encouragement from shopping centres and merchants to use contactless payments over cash,” Sarkar told Zawya earlier.
Electronic wallets provide a convenient way for consumers to make purchases as they are capable of both contactless and remote payments. These digital payment options are made possible through apps like Apple Pay, Google Pay or Samsung Pay.
Juniper estimated that in 2025, contactless and e-commerce payments will account for 50 percent of total wallet spend, from just under 36 percent in 2020.
“[These are] high-priority areas where wallet providers need to maximise their merchant networks,” it said.
Challenge for merchants
However, the report pointed out that due to the rapid growth in the availability of digital wallets, coupled with rising adoption among consumers, merchants have had to deal with “difficult decisions” around which digital wallets or payment apps to accept.
The report noted that there are “integration costs” that merchants have to deal with, so picking the right wallets to focus on is highly important.
“Merchants must base their payment strategies around wallet acceptance in order to support a digitally-engaged addressable market, but must also judge the right wallets to target, or they will be lumbered with increased costs and limited benefits,” said research co-author Alexandria Sadler.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021