Fintech Insights

A tipping point for digital and mobile wallets?

April 06, 2020

North American shoppers are notorious for their devotion to plastic: credit cards remain the leading consumer payment method across the continent today, however consumers shop.

Mobile and digital wallets like Apple Pay and PayPal emerged in the last decade threatening to disrupt that entrenched loyalty. Optimists soon suggested a tipping point was on the horizon. These visionaries proclaimed the benefits of digital and mobile wallets would prove so compelling that shoppers would quickly and decisively adopt their use.

This mythical tipping point for digital wallets was always just around the corner, yet year after year North American consumers continued to trail global averages. However, digital wallets are now the leading eCommerce payment method globally, led by overwhelming rates in China, and we project will surpass cash to lead global point of sale payments by 2023.

Digital wallets to lead North America eCommerce payments by 2022

What’s clear is that the undeniable growth of digital and mobile wallets has moved them from the periphery of alternatives to the center of payment’s mainstream.

The 2020 Global Payments Report released by Worldpay from FIS, finds digital wallets gaining significant traction with North American shoppers. We project digital wallets will surpass credit cards to become the leading eCommerce payment method in North America by 2022—accounting for 33% of eCom payment volume.

The deep-rooted credit and debit card habits of North American consumers made a dramatic tipping point unlikely. Worldpay’s historical forecast projected steady, incremental growth for digital wallets in the US and Canada. The 2016 edition of the Global Payments Report predicted digital wallets would account for 27% of North American eCommerce payment volume by 2020—precisely in line with our current estimates.

Mobile wallets double share of North America POS payments

The global boom in smartphone use is enabling mobile payments to thrive at the point of sale. In APAC, mobile wallets Alipay and WeChat Pay are now the leading POS payment method, exceeding even cash.

Mobile proximity payments are also growing in popularity and use among North American shoppers, albeit at a pace that reflects a more complex payment history. Though still low as a percentage, our 2020 Global Payments Report found mobile payments share of North American POS payment volume double in a single year, from 3% in 2018 to 6% in 2019.

The point of sale is where habits around credit cards, debit cards, and cash are even more entrenched. Consumers and the merchants that serve them have co-evolved payment methods over the course of four decades. Many factors contribute to the slower adoption of mobile payments in physical retail, but overall credit cards, debit cards, and cash simply work—and work well.

Mobile wallets and other proximity payments like contactless cards offer the same undeniable benefits of speed, safety, and security enjoyed in eCommerce. The popularity of mobile order-ahead apps, a vast expansion of retail and institutional contactless acceptance, and the widespread use of P2P apps like Zelle and Venmo for retail payments will continue to push mobile wallets to the mainstream. Our 2020 Global Payments Report project mobile wallets will claim 10.1% of North American POS payments by 2023—representing over US$1 trillion in payment volume.

The tipping point? Digital wallet use will rise to gain an outright lead in North American eCommerce payments by 2022. Whether or not a classic tipping point, mobile and digital wallet acceptance is becoming an essential payment method, in North America and around the world.

For a deeper dive into the payment landscape in North America and around the world, download Worldpay’s 2020 Global Payments Report , our annual review that explores the pathways of people and payments that connect us all.