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UK set for soaring digital wallet adoption

UK set for soaring digital wallet adoption

The UK is approaching a seismic shift in how people pay, with digital wallets set to comprise half of all e-commerce spend and nearly a third of POS transaction value by 2027, according to a report from Worldpay.

While digital wallets first emerged in the late 1990s, the Covid-19 pandemic provided an adoption tipping point, with the likes of Apple Pay and Google Pay becoming a 'go-to- payment type for Brits, says Worldpay.

By 2027, digital wallets are expected to comprise half of all e-commerce spend in the UK, worth £203.5 billion. Projections also estimate that digital wallet usage will more than double at UK point-of-sale, rising from 14% to 29% of transaction value over the next three years.

Pete Wickes, GM, Emea, Worldpay, says: "The combined effect of the pandemic, alongside digital wallet technology reaching a level of maturity and implementation in recent years has driven a monumental rise in adoption both globally and locally in the UK.

"It is hard to deny the ease of use and convenience digital wallets provide whether shopping in store or online. From this basis, merchants now have a huge opportunity to diversify their payments choice to meet customer needs."

Underpinning digital wallet adoption in the UK, however, is the deep connection Brits have to traditional payment methods like credit and debit cards, which 69% of consumers use to fund their wallets.

Credit and debit card usage outside of digital wallets continues to be strong, accounting for 46% of e-commerce and 74% of POS transaction value in 2023.

In contrast, account-to-account (A2A) payments have been slow to take hold. For example, A2A accounted for just seven per cent of e-commerce transaction value in 2023 in the UK, the lowest adoption rate across Europe, lagging behind Poland (68%), the Netherlands (64%) and Finland (33%).

A significant difference between these markets and the UK are government-backed initiatives designed to establish trust and encourage adoption, alongside supporting the development of infrastructure like real-time payments systems, says Worldpay.

Meanwhile, Buy Now, Pay Later accounted for seven per cent of e-commerce transaction value in 2023, and is expected to grow at four per cent CAGR through 2027. Cash made up 10% of POS transaction value in 2023, and is expected to drop to six per cent by 2027.

Comments: (2)

A Finextra member
A Finextra member 23 March, 2024, 13:29Be the first to give this comment the thumbs up 0 likes

It would help if reports like these define a digital wallet, presumably a mobile app or browser extension, but there are many payment method that could be deployed in a digital wallet:

- cards

- bank account

- e-money account

- third-party bank account orchestration (open banking)

- non-fiat crypto-currency self-custody account

- non-fiat crypto-currency custodial account

- fiat stablecoin custodial account

- fiat stablecoin self-custody account

All these are very different, all are capable of initiating payments, only some can receive payments.


Andrew Smith
Andrew Smith - RTGS & ClearBank - London 25 March, 2024, 10:28Be the first to give this comment the thumbs up 0 likes

We need to makes sure digital wallets can access the same functionality as that accessed by Apple and Google in their iOS and Android device OS respectively.