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Over half the world’s population will use mobile wallets by 2025, says Boku study

This article first appeared on Finextra.

More than one in two people will use a mobile wallet by 2025, as cash is increasingly displaced, finds a study from mobile payments company, Boku. This equates to an increase of 2.7 to 4.8 billion wallets in use globally in the next four years.

Leading the way in this transition is Southeast Asia, with a 25.5% compound annual growth rate (CAGR) and an expected overall growth of 311% in the next five years. The rise in e-commerce and the dominance of super-apps like Grab and Gojek – particularly in markets such as the Philippines and Indonesia – are just some of the drivers of wallet adoption in this region.

Following closely behind – in areas where wallets are offering access to financial services for the underbanked – are Latin America, Africa and the Middle East. These two regions are due to expand their usage of mobile wallets by 166% and 147%, respectively, by 2025. In Africa and the Middle East, adoption is being catalysed by the increasing usage of mobile money services, such as M-Pesa, which are offering improved access to e-commerce.

In Western Europe and North America, however, wallet uptake is moving more slowly – at 65% and 50% by 2025, respectively. This is a result of high levels of card penetration and contactless usage at physical points of sale. Nevertheless, markets such as the UK are seeing a spike in card-based mobile wallets, due to the adoption of contactless spurred on by the pandemic. Thanks to shifts like this, Boku predicts that three-quarters of Europeans will be using a digital wallet by 2025.

“We are witnessing a paradigm shift in payments driven by mobile wallets,” says Jon Prideaux, CEO at Boku. “Mobile wallets have lowered the barrier to making digital payments and ushered billions of new consumers into e-commerce. These consumers are not in North America or Western Europe, they are in emerging markets, and while they don’t have credit cards, they overwhelmingly have mobile wallets. For global merchants, mobile payment acceptance is not about accepting one type of mobile wallet or another, but ensuring that consumers in every market will have the required selection on payment types in order to monetize transactions.”

Boku’s report follows an eventful week for the mobile wallets sector in Europe, with the merger of Vipps, MobilePay and Pivo as they look to compete against the likes of Alipay, Apple and Google.

 


 

  1. How much will mobile wallet usage grow globally by 2025?

According to a study by Boku, the number of mobile wallets in use globally will increase by 2.7 to 4.8 billion by 2025, representing over half of the world's population.

  1. Which region is leading the way in mobile wallet adoption?

Southeast Asia is experiencing the fastest growth in mobile wallet usage, with a projected 311% increase by 2025. This is driven by factors like e-commerce growth and dominance of super-apps.

  1. How are mobile wallets impacting the underbanked population in some regions?

In Latin America, Africa and the Middle East, mobile wallets are offering financial services to people without traditional bank accounts, leading to a projected growth of 166% and 147% respectively by 2025.

  1. Why is mobile wallet adoption slower in developed regions like North America and Western Europe?

These regions already have high credit card penetration and established contactless payment systems, leading to a slower shift towards mobile wallets. However, some markets like the UK are seeing a rise in card-based mobile wallets due to the pandemic.

  1. What does the rise of mobile wallets mean for businesses?

Businesses need to accept a variety of mobile wallets to reach new consumers in emerging markets who might not have traditional credit cards. This ensures they can capture a wider customer base and maximize their sales.