Why are e-Wallets More Popular In Emerging Markets?

Digital wallet, e-wallet, mobile wallet, they all refer to the same thing – instead of carrying cash or cards, users store their payment information on a device, online service, or software that they can use to make transactions with a merchant.

While the trend of cashless payment is growing rapidly today, especially in the past year as the pandemic drove the switch to online and cashless purchases, e-wallets are actually not new. They have been a popular form of payment in in developed countries such as the USA for the last 20 years or so.

The first form of digital payment was way back in 1997 when Coca Cola started rolling out vending machines that allowed customers to buy their drink with text messages. Very quickly, mobile devices were being used to buy tickets, book hotels, and order food. By 2003, an estimated 95 million users had used a cell phone to make a purchase.

While the use of e-wallets in developed countries is firmly established, digital payments are on the rise and rise in developing nations that are about 20 years behind developed nations in terms of IT infrastructure. Even so, Apigate has enabled e-payment solutions for our clients that has created new synergies and monetisation opportunities.

Some experts project that by 2025, there will be 4.4 billion digital wallet users globally, with a revenue of over USD10 trillion. Within the next two years, 68% of all e-commerce transactions in the Asia Pacific is expected to be made by e-wallet, with emerging economies of Southeast Asia leading the digital payment revolution. About 22% of consumers  say e-wallets are their preferred payment method for goods and services, representing an annual growth of 8%. In Malaysia alone, the number of e-wallet registrations grew by 28.2 million to 66.2 million in 2020.

Here are some reasons why why e-wallets usage in developing countries is growing much faster that developed markets.

1. Rising mobile phone use

This is perhaps one of the most critical factors. For many people in developed countries, a smartphone is just one of several devices they own. But people in developing economies tend to have less disposable income. For many consumers, a reliable smartphone is significantly more affordable than a desktop, laptop, or even tablet. Thus, the device becomes more than a method of communication, it gives many people access to digital products and services, while enabling e-commerce for traditional brick-and-mortar businesses.

2. High level of payment security

E-wallets reduce the dependency on cash which results in better financial security  and decrease risks associated with handling cash like fraud, loss, and theft. In many countries, e-payments have eliminated the need for middlemen in money transfers thus increasing transparency in the transaction process. However, the rise of e-payments also is creating some concerns among users regarding security and cybercrime. Thus companies enabling e-payment systems have to safeguard sensitive merchant and customer data. At Apigate, our robust security systems makes our platform among the top-in-class, ensuring our partners and clients are well protected from fraudulent transactions while ensuring a smooth experience for legitimate payments.

3. More accessible than traditional banking

According to the World Bank, about 1.7 billion people in the world don’t have access to banking facilities. E-wallets are similar to banking services in that they enable a customer to make payments, store funds, and transfer money. All you need is a smart phone and an e-wallet account. One study found that over a third of Southeast Asia’s consumers are ready to replace their traditional banking activities with e-wallet services. In Singapore, Thailand, China, Malaysia, India, Indonesia, and Vietnam, over 12% of the countries’ consumers have already adopted non-banking digital wallet solutions.

4. Access to global marketplace

Internet connectivity and mobile apps makes it easy for people in developing economies to purchase purchase goods and services that might not be easily available in their country. Whatever you need, it is available at your fingertips at any number of e-commerce apps or sites. All you need is a method to easily transfer payments to the seller for your purchase. E-wallets solve that problem by bringing together buyers, sellers and platforms to enable the transaction in a seamless manner.

As mobile phones unleash these countries’ economic potential, it is no wonder e-wallets’ popularity is on the rise. Apigate is on the cutting edge when it comes to payment trends in emerging markets. Call us and allow our experts to show you how you can leverage this trend is crucial for long-term monetization opportunities.