Spending using digital wallets (opens in new tab) is set to exceed $10 trillion by 2025 according to new data from Juniper Research, highlighting a huge upturn in the popularity of mobile payments (opens in new tab), with a jump of $5.5 trillion compared to 2020.
The rise, which indicates a growth of 83%, has been exacerbated by growing demand for contactless payments during the ongoing coronavirus pandemic. Digital wallets let consumers pay with touch-free convenience and allow for payments via POS (opens in new tab) terminals or from anywhere within range of a mobile phone signal for remote transactions.
Contactless and e-commerce payments (opens in new tab) will subsequently account for 50% of all wallet spend in 2025, the study predicts. That marks an increase of just under 36% compared to 2020, which is causing digital wallet providers to make them a high priority for boosting their merchant networks.
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However, the research highlighted how merchants are facing challenges, most notably around acceptance and cost. Integrating mobile wallet technology into existing e-commerce (opens in new tab) infrastructure is seen by some businesses as being a potential obstacle.
Research co-author Alexandria Sadler explains: “Merchants must base their payment strategies around wallet acceptance in order to support a digitally-engaged addressable market, but must also judge the right wallets to target, or they will be lumbered with increased costs and limited benefits.”
Despite the challenges for merchants, digital wallets will continue to grow in popularity because of the continuing pandemic and consumer desire to go contactless. Juniper’s data underlined the upward curve, with over 34% of mobile phones set to use contactless payments by 2025, a rise of 11% compared to 2020.
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