Some of the reasons for this profit growth include the fact that the company increased the number of merchants on its platform from 1 million in the beginning of 2017 to 7 million by March 2018, and launched its mobile app in multiple languages, appealing to the diverse population in India.
But how exactly do the digital wallet companies earn their profit, especially since wallets like Paytm and MobiKwik, in India, are offering up to 50% to 100% cashback?įor instance, India’s largest digital payments company, Paytm, valued at around USD 12 billion, generates its revenues primarily through its payment wallet services (including bill payments and mobile recharge) and its mobile-only marketplace known as Paytm Mall. No one can deny that digital wallets have made cashless transactions extremely convenient and hassle-free for consumers. In physical stores, mobile wallets in Europe have to compete with the speed of contactless cards (which are never out of battery, either), while in the US, they struggle with the lack of acceptance from merchants, compared to credit card acceptance. Europe and (to some extent) the US have a larger variety, but Asia has a larger consumer base, using mobile wallets due to high smartphone penetration and a large group of the population which is un- or underbanked. However, there is a sharp division between the East and the West regarding digital wallet adoption both in variety of wallets and volume of transactions. Out of these, more than two-thirds of mobile wallet users live in Asia-Pacific, with China alone contributing close to 50%.Īsia-Pacific’s mobile wallet users are not only the most numerous, but also the most active ones of mobile payment services and contribute the lion’s share to global mobile wallet transaction value. Asia Pacific, Europe, LATAM, and the US (to) love digital walletsīy the end of 2019, nearly 2.1 billion consumers worldwide will be using a mobile wallet to make a payment or send money, up by nearly 30% on the 1.6 billion recorded at the end of 2017, according to Juniper Research. As a result, in some part of the globe, they help users to accept payments for services rendered, as well as receive funds or remittances from friends and family. Moreover, digital wallets allow consumers in developing nations to participate in the global financial system, as these do not require a bank account with a physical company or branch, often enabling those in rural areas to connect.
So, the new possibilities that digital wallets bring to businesses are appealing for several reasons: they are easily integrated on multiple devices, have user-friendly interfaces, most can be used across channels, and they open the door for extensive loyalty, marketing programs and any type of new features/ideas around payments (such as the Apple’s Credit Card coupled with Apple Pay). Nevertheless, digital wallets are still in a period of proliferation, and the key to their success is not to focus on frictionless payments, but on the added value that a user would get from using the service and the innovation around these wallets (e.g. The digital wallets market has expanded a lot in the last five years, due to the surge of mobile payments, smartphone penetration, shift in consumer behaviour, and sometimes regulation. Digital wallets in a nutshellĪ digital wallet is a system that stores users’ payment information and passwords for numerous payment methods and websites. Today, consumers find it natural to manage their credit and debit cards, loyalty and medicare cards, insurance and business cards, receipts, IDs, train and event tickets via their smartphone. Back then it seemed incredible that with the touch of a finger, customers could purchase their daily groceries or favourite lattes. The bulky old strapped leather wallet could be replaced by the sleek, elegant, Apple smartphone. When Apple CEO Tim Cook announced the launch of Apple Pay on September 9, 2014, the audience was amazed.
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