I've recently been tracking some of the key themes that are being aired by the media when taking about digital wallets. 

If it shows one thing above all else, is that not only is the humble digital wallet becoming part of the financial lexicon, but it’s playing a key part within how people deal with life. 

Let's first look at some of the main themes I've seen: 

1. security  

2. growth 

3. Apple/Samsung/Google 

4. Gen Z and Millennials 

5. crypto 

Security 

No-one would be surprised at the first trend. In its simplest form, a digital wallet is a safe storage facility for fiat currencies, crypto and all number of digital items (flight tickets, theatre tickets, passes, personal ID, insurance policies and much more).   

Yet, sometimes weirdly, the digital wallet is placed center-stage as the evil villain, complicit with the latest swindler transferring x number of billions from one wallet to the next. This is typically related to crypto wallets, but that is what many people think of when they hear “digital wallet”. I have this image of a wallet wearing a balaclava and wielding a knife. Let me assure you, the wallet is an innocent party in all this! 

However, it does create a very useful discussion on hot and cold wallets (connected, or not to the internet, which could be anything from a cold storage crypto wallet to the thing in your pocket), open or closed-loop wallets (those that welcome other participants, or don't), or non-custodial versus custodial wallets (those that with no private keys, or those with).  This is good for all of us to know and understand the benefits and shortcomings of each, because it helps safeguard funds.  The more of this the better. 

But bear in mind the wallet is just a tool - okay, it might be sometimes a bit of a clever tool, but the blame for what happens to it lies in the user. That is, when a wallet is built with sufficient safeguards. Many of the crypto debacles have been due to lax security, or outright fraud. You don't blame the car when stolen. But you do need to hold the manufacturer accountable if they didn’t make efforts to secure the car in the first place. 

Growth 

Another day, another report on how the digital wallets market is growing. Okay, I'm not complaining about this, it’s my market, but I wonder who thinks, you know what, in ten years’ time I'll look back at that report and see if their prediction was right? 

And being keen on stats and data, I'm not wholly sure how some reports can confidently predict that on 10th August 2034, at 2pm, some 29 billion wallets will be in use.  But fair play to them. What we can say with confidence of course, is that the market is rapidly growing.  

Take a new report from ABI Research which says that over the next five years the number of mobile digital wallets will almost double. The regions driving this growth are the Middle East, Africa, Asia and Latin America. Bear in mind that the Middle East and Africa have the largest proportion of underbanked and unbanked populations. It here which is witnessing a ground-up transformation the digital payment ecosystem. 

Apple/Samsung/Google 

Whenever journalists talk about digital wallets, the tech giants will rear their heads. And there's a simple reason for that, they have the most widely used wallets. 

Apple Pay is the biggest, but, surprise surprise, it is only available on iOS devices.  

Others, in a list put together by the good people at Tech Target, include: 

• Cash App - this one's big on storing coupons, loyalty cards; 

• Dwolla - known for its versatility with other business apps; 

• Google Pay - can be used on both Apple and Android devices; 

• PayPal - one of the oldest digital wallets around; 

• Samsung Wallet - only set up for mobile purchases; 

• Venmo - boasts some 83 million users and uses QR codes; 

• Zelle - rapid payments. 

Gen Z and Millennials 

This is how it goes: youngsters love wallets - the older generations, not so much. 

That's a sweeping generalisation, but digital wallets are indeed very popular with the young consumer. It's reckoned that 65% of some millennials used a digital wallet in 2021. And this is up 6% from the year before.  As for Gen Z, they are only slightly behind, with 57% of them using a wallet in 2021, compared to 50% in 2020. 

This might reflect smartphone usage, but also the fact that companies and brands do aggressivity target these two groupings.  

And consider this sobering fact, by 2029 72% of the world's workforce will be made up of Gen Z.  

What's more, the combined spending power of both generations just in the US alone is currently $350 billion.  

These generations have no fear of using digital wallets and will spread their love across a number of different providers. For example, people love using their iPhone to store their flight tickets, PayPal is liked for online payments and Venmo is popular for peer-to-peer payments.  

But the older generations are not being left behind. Latest research suggests that digital wallets are becoming increasingly popular with the bay-boomers as they begin to engage with the available technology.  

Crypto 

Whatever your view on crypto - the caped crusader saviour of the universe, or the devil's plaything - you can't hide it in under the mattress. Crypto has to live somewhere, and the wallet (custodial, non-custodial, or cold storage) is it.  

This ties in with my first comments about security - this is why the words digital wallet are often seen with the word’s crypto fraud. As I said before, this is an unfair suggestion. If you are a fraudster, either on a corporate level, or just trying to part people from their money, you'll use all the tools at your disposal. Just as a physical wallet, or purse can be pick-pocketed, so can the digital version. But the crucial difference here, is that digital wallet can be easily ring-fenced, making sure any light-fingered predators can be kept at bay.  

So, what we need are a few more positive comments about the good old digital wallet, and how it can actually, if set up correctly, be as secure as Fort Knox. 

And here's the thing, crypto is getting a (well deserved, perhaps) kicking at the moment, but have you looked at how many mainstream financial institutions are getting involved - even the illustrious JP Morgan is said to have just trademarked a cryptocurrency wallet. This is particularly remarkable given Jamie Dimon’s statements on crypto. Crypto might be the wild west for now, but there’s a tremendous investment in the ecosystem, and these issues now should prompt change at the individual, corporate and likely the regulatory level to dramatically improve the landscape in the long run.  

Digital Wallet 

Let’s hear a round of applause for the digital wallet, which will become so commonly used by most of the world's population, that we won't give it a thought, which is kind of right really.