The global digital wallet market has been witnessing an exponential growth over the last couple of years as banks and retailers increasingly focused on offering easy payment options & lucrative cashback and discount benefits. Undoubtedly, in terms of technology, mobile or digital wallets are one of the prominent innovations having the potential to replace physical currencies and contribute towards worldwide efforts for establishing cashless economies.
Today, mobile wallet market is gaining foothold around the globe and represents an effective partner for companies to enhance customer engagement, allowing them to stand out in a highly competitive industry. From mass transit operators to fintech companies and banks, businesses of all sizes are keen to adopt new technologies to enable extremely fast transactions, incentivize digital payments, and make the overall fiscal transaction seamless and incredibly convenient, providing innumerable growth opportunities for digital wallet companies.
Digital payments are swiftly disrupting the spending habits of cash-friendly economies as, mobile wallets have apparently become one of the most preferred methods of transaction for a growing number of customers.
Asia-Pacific (APAC) has particularly experienced rapid implementation of digital banking and payment features, become a major customer base for mobile wallet industry. Listed below are three key trends in digital banking that are expected to boost remunerations for APAC mobile wallet industry:
- Mobile POS wallets:
In emerging economies like India, digital transactions have grown diversely, and Indian customers are adapting to mobile wallets faster than developed economies like the US and UK did, owing to the huge population base. Indian government’s demonetisation move in 2016 had become a crucial factor in this growth, as temporary cash crunch in the country compelled people to switch to digital modes of payment.
Mobile point of sale (mPOS) allows businesses to perform financial transactions more flexibly, without the need to be tethered to one location. Numerous fintech companies and banks have subsequently developed innovative mPOS solutions to ease up payment acceptance and transfers for organizations. This is rather evident from the estimate that mobile POS terminals market size will surpass USD 55 billion by 2024.
For instance, in 2018, Hong Leong Bank had introduced the first all-in-one smart point-of-sales payment solution in Malaysia that can integrate and accept all cards and e-payment transactions in a single device. It would significantly benefit traders and allow customers to choose their mode of payment as per their preferences.
As more such initiatives are undertaken by digital wallet companies to offer new set of payment solutions for customers, APAC digital wallet industry will gain considerable traction in the near future.
- Instant payments:
In recent times, there has been a growing need for instant payments due to digitization of various merchants, retailers and other financial institutions. Customers are able to perform faster money transfer and settle bills at the drop of a hat. Digital wallet industry has seen significant adoption of quick payment solutions that can help make purchases online and at the smallest of the stores.
Consumers in APAC have taken the advantage of several digital wallet options presented to them, including AliPay, MobiKwik, Kaching, Paytm, and FreeCharge. In India, instant payments through mobile wallets hit an all-time high in recent years, as they deliver significant value to all applicants in the payment ecosystem, both in terms of volume and value.
For instance, Paytm had launched its instant payment facility to reach over 9.8 million merchant partners in 2018, allowing them to settle payments immediately. The merchants could track their payments and settlements in real-time for free, a feature which can certainly drive the expansion of digital wallet market share.
- Artificial Intelligence and Blockchain technology:
Seemingly, many organizations are now embracing digital technologies like AI and blockchain to distinguish themselves from other players. Worldwide, banks are looking for more distinct ways to use blockchain technology in daily banking process. It is believed the trend will influence growth for digital wallet market globally.
In 2017, the Reserve bank of India had successfully tested blockchain technology for trade applications. It was carried out in partnership with MonetaGo and financial institutions as well as domestic banks.
Allegedly, the Reserve Bank’s blockchain research followed a partnership between ICICI bank and Stellar where ICICI bank had unveiled its plans to develop a Stellar-based blockchain application for transactions, indicating a huge potential for the technology to automate trade settlements and transactions.
Artificial intelligence (AI) based chatbots have also gained momentum among customers when it comes to banking. Banks like Kotak Mahindra and HDFC are keen to introduce chatbot-based technology to enhance customer service, which will enormously revolutionize digital wallet market outlook in the forthcoming years.
DBS Bank, the largest bank of Singapore and a leading bank in Asia, had introduced Digibank in 2017 which become India’s first mobile-only bank. It comprises a suite of pioneering technology, from biometrics to artificial intelligence, for customers to experience a completely new way of banking.
All in all, with more than 450 million digital wallet users in India, the banking and the financial sector represents a steadily increasing customer base for digital-based technologies in APAC and for the overall mobile wallet industry. Banks and financial institutions seem to invest massively in the development of their own mobile wallets to provide a tailor-made experience to their customers. Reports estimate that global mobile wallet market size will hit $250 billion by 2024.