Mobile Wallet Market

Market Overview

The global mobile wallet market size was valued at USD 700 Billion in 2017 and is estimated to grow at a CAGR of 37% during the forecast period. The e-commerce market's rapid growth, driven by widespread smartphone and internet usage, compels companies to expand through strategic acquisitions and new product development.

A mobile wallet is a digital wallet that saves information about payment cards on a mobile device. Mobile wallets are a convenient method for making in-store purchases. A mobile wallet enables users to make mobile recharges, bill payments, movie and travel reservations, and bank account transfers. The conventional payment market is experiencing a high-level technological transformation with the emergence of smart cards, e-wallets, net banking, and others. Mobile payment technology is set to disrupt legacy business models, owing to new technological innovations such as the integration of wearables, biometrics, and blockchain technology. For instance, in September 2018, Infinito Wallet launched the Universal wallet with Cardanol’s ADA cryptocurrency support. The technology is expected to pave the way for fast and secure transfers through a smart contract platform, specifically for applications that consumers, businesses, and governments can rely on.

Market Dynamics

Market Driver

Booming E-commerce Industry Globally

The global e-commerce boom is expected to drive the mobile wallet market growth during the forecast period. The e-commerce market is growing at a rapid pace on account of the increasing penetration of smartphones and the internet, which has compelled e-commerce companies to rely on strategic acquisitions and new product development to expand their market presence. For instance, in December 2017, Kroger Co., a Cincinnati-headquartered grocery chain, launched a new mobile payment option by teaming up with JPMorgan Chase & Co to offer mobile payment options.

Market Restraints

Rising Risk of Cyber Attacks

As the use of mobile wallets continues to increase, mobile wallets and mobile payment apps have become prime targets for cybercriminals. Attacks on mobile wallets have resulted in the loss of hundreds of millions of dollars and the disclosure of sensitive information. The risk of cyberattacks may impede the steady growth of the business. Cyberattacks such as malware, phishing, ransomware, and denial of service impacted over fifty percent of Indian enterprises, according to NITI Aayog data. Since fintech service providers are constantly introducing new technology and features to meet customer needs, they are becoming more susceptible to various cyberattacks, which may impede market growth.

Market opportunities

Growing Adoption of Blockchain Technology

Blockchain technology could revolutionize mobile wallet technology by mitigating the cybersecurity risk associated with digital transactions. Blockchain technology can provide a secure medium for identity verification and authentication of a user’s financial transaction. In blockchain technology, all transactions are time-stamped, encrypted, and tamper-proof, which largely reduces the issues of fraud and double spending. Currently, the average remittance charged by any financial intermediary (bank) for performing any financial transaction is about 7.5 to 10%. The adoption of blockchain would enable customers to have direct point-to-point transactions without needing a third-party interface, thereby reducing expensive transaction fees.

Regional Analysis

North America is estimated to hold the largest share of the mobile wallet market, owing to rapid developments in mobile wallet technology, which have intensified competition among various companies in the U.S. with an intention to improve consumer convenience and lower payment costs. In 2016, Google upgraded its wallet for person-to-person purposes, and Android Pay was launched. At the same time, bank-centric wallets such as Capital One, Chase Pay, and others were also launched. The Point of Sale (POS) environment is changing rapidly in Canada, owing to the increased usage of tablets and mobile devices for payments in e-commerce. These devices have enabled the creation of a secure channel to conduct financial transactions. In 2016, Payments Canada enhanced its framework to allow mobile payments through POS by introducing the process of tokenization, which replaces customers’ banking credentials with proxy credentials, thereby introducing privacy in customer transactions. Additionally, the integration of high-level authentication methods, such as biometrics for the protection of banking credentials, is projected to fuel the demand for mobile wallets in Canada.

Asia-Pacific is predicted to experience substantial growth over the projection period. The market is driven by a rising population, increased smartphone use, rising internet subscribers, and rapid growth in the retail and e-commerce sectors in countries such as India and China. In addition, expanding government initiatives such as Digital India and Make in India are anticipated to increase the prevalence of smartphones and other smart devices, leading to a rise in demand for mobile wallets. Customers from China, Singapore, South Korea, and India are avid users of these digital platforms worldwide. The growing adoption of mobile technology in emerging nations provides banks and fintech companies a new opportunity to reach unbanked and overlooked people in rural places through mobile banking products. China dominates the Asia-Pacific market for mobile wallets. This is due to the abundance of e-commerce platforms and the high smartphone penetration rate in the country. Large businesses, such as Tencent, Alibaba, and Baidu, are creating partnerships with a variety of retail outlets and online platforms in order to expand the availability of their products across many channels.

Europe is predicted to witness significant advancements in applications, including NFC-based ticketing, transactions, and access control. The hotel and public transit application segments represent a substantial portion of the European market. PayPal, one of the global players in the e-wallet market, has expanded in Europe by integrating with many e-commerce platforms. It has also recently rolled out its mobile app to offer a better user experience. Additionally, other companies that are expanding in Europe include Apple, Samsung, and others. Alipay has recently acquired the support of more than 900,000 merchants in Europe for supporting Asian communities and travelers abroad. The emergence of new players in the mobile wallet market, such as Yoga Wallet and Pay by Bank App in the U.K., has also intensified competition. Pay by Bank App was developed by four of the biggest banks in the U.K. and offers a secure and trusted solution to customers. On the other hand, Yoga wallet adopts a competitive strategy to indulge incorporated player and their beneficial schemes into their application, thereby expanding its consumer base. The Yoga wallet application has received an investment of about USD 15 Million from the retail company Metro Group, which would be used for its expansion.

The new government regulatory initiatives, along with the advent of new local, regional, and global payment providers, are bringing about rapid transformation in the Middle East. The substantial expansion of the e-commerce sector in countries such as Saudi Arabia, the United Arab Emirates, Israel, and Turkey, among others, is largely responsible for the market expansion in this area. This region's market expansion is also fueled by people's decreased reliance on cash for transactions. The rise in digital transactions throughout the Middle East and Africa is facilitated by the increasing prevalence of smartphones and improved internet connection. Numerous participants' investments in numerous markets around this region boost the availability, profitability, and dependability of digital wallet choices. This improves people's adoption of mobile wallets, hence driving market expansion.

Segmental Analysis

The global mobile wallet market can be segmented based on wallet type, payment mode, and application.

Based on wallet type, the market can be segmented into- closed wallets, semi-closed wallets, open wallets, crypto wallets, and IoT wallets.

The semi-closed wallet segment dominates the market. Semi-closed mobile wallets are gaining popularity due to the entry of technology companies in the financial industry. More than one-third of millennials exclusively use bankless digital payment alternatives. This increasing consumer desire will push technology companies to build semi-closed mobile wallet products, fostering sector growth.

In 2023, the worldwide crypto wallet market is valued at USD 1,505.90 million, with Europe contributing USD 366.10 million of this total.

On the basis of payment mode, the market can be segmented into near-field communication (NFC) and remote payment.

The near-field communication segment accounts for the biggest revenue share and is anticipated to maintain its dominance over the market during the forecast period. Using NFC technology, consumers can pay for goods and services at a physical point-of-sale (POS) terminal with their mobile phones or other smart devices.

Due to the increasing prevalence of cashless payments over communication networks, remote technology is anticipated to experience the fastest growth rate over the projection period. Using a mobile wallet that utilizes remote technology, consumers can make purchases via a mobile website. Primarily used for online shopping.

Based on application, the market can be segmented into mobile commerce, mobile transfers, micropayments, and others.

The mobile commerce segment will likely continue its position as the leading contributor to revenue over the forecast period. The potential benefits of allowing mobile wallet payments are becoming increasingly apparent to stores and online merchants. The goal of retailers integrating cashless payment or contactless payment technology with digital marketing is to gather consumer data and loyalty. In addition, NFC technology is expected to boost operational efficiency by reducing processing costs and speeding up checkout. The technology assists e-commerce enterprises and shops in offering great deals and tracking customer loyalty awards in order to strengthen their relationships with mobile consumers.

Recent Developments

• February 2022- Apple announced plans to implement Tap to Pay on iPhone. Millions of merchants in the US, from small shops to huge retailers, will be able to use their iPhones to accept contactless credit and debit cards, and other digital wallets with a simple tap – no additional hardware or payment terminal is required.
• July 2022- Google has launched a multifunctional digital wallet that lets users store and utilize digital credentials such as identity cards and health permits, payment cards, transit and event tickets, and hotel keys.