A new study from Juniper Research, the foremost experts in emerging payments, found that the total value of digital wallets transactions will rise from $9 trillion in 2023 to $16 trillion in 2028, a growth of 77%.
This trend is driven by growth across both developed and developing markets, as the increased adoption of advanced services such as BNPL (Buy Now Pay Later) and microloans drives end-user engagement. The study found that in a highly congested wallets landscape, diversifying their appeal to users is vital.
A digital wallet is a software-based system that can act as a storage mechanism for a user’s payment, identity, loyalty, or ticketing information.
Advanced Services to Create New Revenue Streams
The report identified advanced services as a key source of revenue growth for digital wallets. Advanced services, such as BNPL or microloans, are allowing digital wallet providers to diversify their revenue. The popularity of BNPL, especially among younger consumers, will draw greater numbers of users, and generate additional revenue. This approach can be seen with Apple’s roll-out of add-on services, including Apple Pay Later.
Research author Michael Greenwood added: “Advanced services give digital wallet providers an opportunity to differentiate themselves in a congested market and generate additional revenue. Super app strategies, which many digital wallets are pursuing, will rely on the effective deployment of advanced services at scale.”
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Security & Convenience Key Drivers for User Adoption
The research found that security benefits are a key driver of digital wallet use in eCommerce in developed markets. Many consumers do not wish to enter card information online. With digital wallets, this issue is reduced, as tokenisation enables card and other payment information to be used in a highly secure way. The research also identified that as digital wallets become broader, including elements of digital identity, convenience will play a greater role; enabling wallet services to act as an all-inclusive app for financial wellbeing.