The End Of Paper Money In 10 Years?

The global digital payments industry has seen many innovations over the past few years, including mobile wallets, P2P mobile payments, real-time payments and cryptocurrencies which have drawn many users.

Since 2020, billions of people around the world had to change the way they live, work, and shop. This has accelerated consumers switch to alternative touchless payment options such as debit/credit cards, mobile wallets, and other cashless payment methods. 

As a result, mobile wallet adoption, rose to a historic high of 46% in 2020, up from 40.6% in 2019 and just 18.9% in 2018 according to a report from ACI Worldwide. Global digital payments expected to hit USD 6.6 trillion in 2021. That’s a jump of 40% over the past two years. Countries such as Brazil, Mexico, and Malaysia, where cash has always been the favourite form of payment, have become some of the fastest adopters of mobile wallets. 

The volume of non-cash retail transactions had actually been steadily growing since 2017 in mature APAC markets, with estimated 10% CARG through to 2022. But developing economies in Asia is where the action is as, with an estimated 23.5% CARG through to 2022. 

Not limited to digital purchases or e-commerce

This trend is not limited to online purchases either. Worldwide, in-store payments using a mobile wallet exceeded cash payments for the first time ever in 2020, according to the Global Payments Report 2021. Overall, cash payments fell by 10 percentage points, making up just 20% of all face-to-face payments globally. In Canada, the U.K., France, Norway, Sweden and Australia in-store cash payments fell by 50% or more in 2020. The number of digital wallet payments at stores is growing faster than the number of payments made with cards.

The Global Payments Report projects that by 2024, cash will be used for less than 10% of in-store transactions in the U.S. and less than 13% worldwide.  One-third of in-store payments is expected to be made by digital wallets globally.

And there is much more wallet share to take by digital wallets given that exiting 2020, roughly $18 trillion was still being spent in cash and checks globally. 

A survey by Ernst and Young of 129 financial services professionals found that 96% agreed that digital payment methods will replace cash by the end of the next decade. 59% of them believed mobile payments will be the most common method adopted.

Potential of digital payment not fully realised yet

There are many ways that an e-wallet can be used as more than just a secure way to make payments. E-wallets can be integrated with apps to create synergies that enhance the benefits for all parties – merchants, platforms and customers.

For example, Disney’s MagicMobile service adds allows Apple Wallet users to add a digital pass that is linked to users’ accounts. This simplifies the entrance process for Disney parks as their iPhone or Apple Watch are automatically scanned at the entrance. The mutual benefits enabled by this partnership enhances the user experience for both Disney and Apple Wallet leading to enhanced customer satisfaction, loyalty and usage.

Other companies are finding other ways to create synergies as well. Hertz, the global car rental company, enables customers to download a reservation confirmation to their mobile wallet. Customers of some health insurance companies, such as Blue Shield of California, can carry a digital version of their membership card in their mobile wallets. Many airlines allow passengers to download mobile boarding passes into their e- wallets. Digital wallets could also be a hub for the digital vaccine passport when worldwide travel is allowed again post-pandemic.

At Apigate, we have enabled several such synergies for our partners across Asia. Our deep understanding of business strategies and market-leading experience in enabling e-payments have allowed over 100 partners to gain access to over 1 billion consumers through mobile operators, e-wallet providers, e-marketplaces and more. We are more than a solutions provider, we help our partners identify opportunities as well as execute the technology to best capitalise on them.

The way forward

As the pandemic continues to be among us, businesses and intermediaries across the payment ecosystem need to respond rapidly to adapt to the rapid changes in consumer behaviours. 

However, given the dynamic nature of the digital payment market today, experts expect massive consolidation to happen in coming years. Some smaller players will fall off. Various e-wallets may resort to mergers and acquisitions as an option to survive. If this occurs, merchants will have to reconfigure their e-payment platform again or perhaps even multiple times.

To survive and thrive in this massive competitive market, identifying new opportunities, carving out new niches, and creating new synergies with strategic partners will be key.

Talk to Apigate if you need a partner who is on the cutting edge when it comes to payment trends in emerging markets. Call us and allow our experts to show you how we can help you create long-term monetization opportunities.