- Three minutes read
Changing of the card: why consumers are welcoming the age of the digital wallet
Mobile and digital wallets are growing in popularity and importance for the modern consumer, according to our recent report. We tackle the shifting attitudes driving this change, and what businesses can do to embrace the future of payments.
It’s strange how quickly once-essential items fade into obsolescence. It wasn’t so long ago that consumers would be unwilling to venture abroad without travellers’ cheques – now rarely seen due to the proliferation of credit and debit cards. The same may soon happen to the familiar leather rectangle carried in your back pocket or bag.
Our Lost in Transaction 2023 report found that more and more respondents (52%) feel comfortable leaving home without a physical wallet and paying for everyday purchases with a mobile wallet — Apple Pay, Google Pay, or another app that enables them to pay with their smartphone. In fact, 55% of consumers believe mobile wallets will take the place of physical cards in the next 10 years.
Adoption of digital wallets — eMoney accounts that enable you to pay online without sharing your financial details, like Skrill, and NETELLER — is also on the rise, with 40% of consumers paying online with digital wallets more often than they did a year ago.
So how has this change come about, and what does it mean for your business?
Changing consumer payment habits
It’s important to note that the move to mobile and digital wallets won’t happen overnight. In fact, many consumers still prefer manually entering card details when paying for online gaming, online gambling, leisure, travel, hospitality, eCommerce payments, and crypto.
There are, however, signs of change. Overall, more respondents are using credit cards stored in a mobile wallet (40%), rather than physical credit cards (36%) when paying online.
We’ve seen that payments using digital wallets have grown significantly – now, they’re only behind debit and credit cards as consumers' payment method of choice for online gaming, online gambling, travel, hospitality, leisure, and crypto.
And the experience of using digital wallets clearly struck a chord – it is now the preferred online payment method for 41% of respondents who used a digital wallet in the previous 12 months. Strikingly, 20% will abandon their cart if their favourite digital wallet isn't available, and 39% of respondents would pay with them more if they knew more about the technology or it became more widely available.
With this in mind, it could prove costly for businesses neglecting to offer digital wallets among their payment options.
Why consumers are turning to digital wallets
As for why consumers are turning to digital wallets, there is no single answer.
Security is playing a part. Almost half (49%) of respondents consider digital wallets more secure than other payment methods, likely because they don’t require you to enter your financial details whenever you pay online, something 52% of respondents told us they don't feel comfortable doing.
The ability to keep a closer eye on budgets, too, is hugely appealing during the cost-of-living crisis, with 51% of respondents valuing the financial insights they can gain from digital wallets. Being able to connect to third-party apps to make quick bank transfers is also appreciated, according to 55% of respondents.
Concern around security and tighter budgets isn’t going away, and neither is the quest for consumer convenience in payments. Businesses should ensure they provide customers with these increasingly popular payment methods and welcome the dawn of the digital wallet.
To learn more, download the full report: Consumer Payment Trends 2023: How consumers’ shifting priorities are impacting the experience economy.