The Golden Opportunity of Digital WalletsBlog / By NovoPayment The Golden Opportunity of Digital Wallets November 9, 2022 One of the most significant trends of the fintech revolution of the past few years has been the widespread adoption of digital wallets. There are many factors that have contributed to their spike in usage, and the growth of the mobile financial industry at large is an apt place to start. According to the GSMA Mobile Money State of the Industry Report 2022, there was more than 1 trillion USD worth of mobile money transactions in 2021 – a 31 percent year-over-year increase compared to 2020.In regard to the adoption of digital wallets themselves, there were 2.6 billion unique digital wallet users in 2020, and this figure is expected to surpass 4.4 billion by 2025 – more than half of the world population.So, what are the factors driving this mass adoption over such a short period? First, let’s define exactly what digital wallets are.What is a digital wallet?Simply put, a digital wallet – also known as mobile wallet and e-wallet – stores money, payment and account information, and more on a mobile device. Although the most common types of information stored in a digital wallet are credit and debit cards, they also often store other items such as plane tickets, driver’s licenses, event tickets, gift cards, and even car keys.While digital wallets have come to dominate e-commerce, they have also become increasingly prevalent for in-person transactions. In these cases, the mobile device that houses the information is typically scanned by a card-reading device. This contactless method played a significant role in their increase in usage during the COVID-19 pandemic.What are the benefits of digital wallets?As with most new technology solutions that quickly become popular among the masses, digital wallets have proven to be beneficial to both consumers and businesses alike. Consumers, especially in this era of instant satisfaction, are driven by convenience, ease of use, and speed – all of which play perfectly into what digital wallets can provide. Cash, which has been dwindling in use since credit and debit cards were introduced, becomes even less necessary with a mobile wallet on your phone.E-commerce, which significantly grew during the lockdowns brought on by the pandemic, has come to represent the top use case for digital wallets. And in 2021, e-commerce sales in the U.S. totaled $870 billion – a 51 percent increase since 2019.If the payment method is offered by the merchant, online shoppers can easily pay with their digital wallet for a simpler and more convenient experience than manually entering card details, as it typically only requires a quick identity verification to make a purchase – often a password, face scan or touch ID.Digital wallets also enable access to financial services for the unbanked and underserved communities. In this sense, they have great potential to increase the level of financial inclusion, especially in markets that have high internet and smartphone adoption but low banked populations. In Mexico, for example, 72 percent of the population has internet access, but only 37 percent has a bank account. This presents a golden opportunity for digital wallets to enter the fray and make a difference in granting wider access to financial and payment services.For businesses, the simplicity and ease of use that digital wallets provide consumers with have been shown to result in benefits including greater sales conversion at checkout. According to research by SalesCycle, nearly twice as many consumers abandon their carts on mobile devices compared to those shopping on a desktop – indicating that cumbersome checkout experiences on mobile devices, in which users have to manually enter their personal and card information, often leads to cart abandonment.Digital wallets provide a solution to this by simplifying the mobile checkout experience, eliminating the additional steps where users tend to change their minds about making a purchase.The opportunity for digital wallets is still ripe in the Americas, and as a full-stack partner for financial services innovation, NovoPayment can enable the issuance of cards to mobile apps for immediate use, seamlessly integrate payment offerings into banks’ existing infrastructure, and offer cardholders the convenience of storing multiple Mastercard and Visa cards in their wallets.The flexible, end-to-end solutions we offer enable our clients to build and scale digital wallets into various use cases, including the evolution into a one-stop “super app” that can fulfill a variety of valuable functions.Super apps, which have come to dominate the Asian market in recent years, have the potential to follow suite in the Americas. While their introduction to western markets has come later and their adoption has not yet nearly reached the levels such as those of Asian giants WeChat and Alipay, Latin America’s ‘everything’ super app and NovoPayment partner, Rappi, is the prime example of what’s possible for the versatile mobile applications in the region.Learn more about how NovoPayment can provide convenient, contactless payment solutions that keep pace with customers’ expectations and lifestyles.