Why Mobile Wallets Are Overtaking Credit Cards

Credit cards are still a popular cashless payment today, since it was invented way back in the 1950s. It is still one of the popular payment choices globally, because of all the measures it has to protect consumers.

However, only 10% of all global consumers own a credit card. This is partly due to strict qualification criteria required by issuers. Another major factor is that in many emerging economies, especially in Asia, large segments of the population still lack access to banking facilities. This is due to rural folks finding it difficult to do travel distances to physical premises to do their banking, lack of banking facilities such as branches, kiosks and ATMs in many locations, or not qualifying for a credit card.

In these markets and situations, mobile wallets have grown to be the dominant cashless payment choice. Besides providing a simpler user experience for online transactions, mobile wallets enable them to make cashless transactions and access the digital economy. Users often have a variety of local payment options which provide them more convenience and even accessibility to financial services.

Here are some key advantages of mobile wallets over credit cards that’s driving them to the lead in emerging markets.

  1. Ability to store money value

Besides being difficulty accessing banking services, a credit card is basically a short-term, high-interest personal loan which people may not prefer to be involved with. On the other hand, mobile wallets enable users to store cash value within the wallet, enabling users with difficulty accessing banking and credit card services to participate in the digital economy. The ability to store value in their mobile wallet also allows users to track and budget their expenditure, which is an important feature for some segments of the population who want to be more careful with their expenditures.

  1. Easier financial access

Unbanked users in emerging markets often find it more convenient to manage their money with mobile wallets than to actually deal with a bank. For example, access to banking facilities could be made difficult because they live in remote areas or they could be living in an area with a low population density. To reach the nearest banking facility could take significant travel time. With mobile wallets, users can top up their wallet balance from many physical locations, including stores, kiosks and even ridesharing drivers. This makes managing balances much more convenient than dealing with credit cards’ issuing banks and their often limited service channels.

  1. Variety of services

Mobile wallets also enable underserved users in emerging markets to access new products and services that are available in the digital economy, even with limited or no access to banking or card facilities. These include loans, utility bill payments, ticketing, ride-hailing, food delivery, healthcare payments, insurance services and much more.

While the popularity of credit cards is not going to fade away anytime soon, mobile wallets make it easy for underserved segments of society – especially in emerging markets, especially by those who don’t qualify or having limited access to banking facilities – to adopt cashless transactions.

In fact, Asia is in the forefront of mobile wallet adoption and the numbers are expected to explode over the next few years.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.

Merchants seeking to reach new audiences can leverage the rising trend of mobile wallet adoption in emerging markets, as previously cash-based consumers can now make online payments and are eagerly joining the digital economy.

If you’re looking to leverage mobile wallets to reach more paying consumers in emerging markets, get in touch with Apigate. Allow our experts to show you why we are on the cutting edge when it comes to payment trends in emerging markets and we can help you can leverage this trend for long-term monetization opportunities.