Advancements in technology have given an immense rise to the banking and financial services sector and the increased use of smartphones makes this growth more obvious. Today, most people make transactions online through their phones using a digital wallet, also known as e-Wallet, in some way. The online service enables individuals to make efficient electronic transactions for purchasing items online.
The adoption of digital wallets, be it online with a PC or through a smartphone, is majorly growing due to the massive explosion of smartphones and laptops. Considering industry reports, almost nine in ten U.S. households own a smartphone, which is making it the second-most owned technology device after television. In a Consumer Technology Association (CTA) report, around 87 percent of U.S. households own a smartphone. The report also foresees that smartphone ownership will match that of televisions within the next five years.
So, here are the factors that are driving the growth of digital wallets.
Rise in Number of Smartphone Users
The world today has surpassed over 3 billion smartphone users and will add more hundreds of millions in the next coming years. Looking at market reports, 1.4 billion smartphones were sold worldwide annually in the past five years. According to the Federal Communications Commission’s 20th Mobile Wireless Competition report, individual consumer smartphone ownership nearly doubled in a time span of five years, from 42 percent in 2011 to 81 percent in 2016. And the market still has high growth potential, as the smartphone penetration rate is increasing by 70 percent in several highly populated countries like China and India.
Secured, Convenient and Easy to Use
Digital wallets offer enhanced security, flexibility and convenience to users. From biometric authentication to the ability to lock a lost or stolen phone, digital or e-wallet provides a better security option. These security features are much harder to break than using a lost or stolen card. When it comes to convenience, individuals can complete a transaction using a mobile wallet with a single tap on their smartphone at the checkout terminal. As per a recent SpeedPay Pulse report, nearly 55 percent of American adults stated that they value the speed a mobile wallet offers to pay a bill.
Mobile wallets currently are gaining rapid traction as more consumers using them on a daily basis. Looking at the SpeedPay Pulse report, 24 percent of the US consumers use a mobile wallet on a daily basis, while 40 percent use weekly or multiple times per week. And this is all done by awareness about the digital wallet, how it works, and how it can be used. In an Accenture report, most of the consumers with 52 percent claim to be extremely aware of mobile payments, which is up around 10 percent from last year. Thus, as more people will aware of the service, it will eventually gain popularity.
More Germane for Online Subscriptions
Most consumers perceive higher relevancy for online subscriptions, when it comes to using a digital wallet for recurring payments compared to traditional subscriptions. In a recently published report from GoCardless, which surveyed 12,785 consumers in 10 different countries, just 22 percent of Americans would most make use of a digital wallet to pay for recurring payments for an online subscription, following to a much lower amount than Spanish consumers with 39 percent, and Australian and French consumers who both were at 34 percent.