One in two people will use a mobile wallet by 2025, says a new report by mobile payments provider Boku. At the end of 2020, there were over 2.8 billion mobile wallets in use, and that is projected to increase by nearly 74 percent to 4.8 billion by the end of 2025, or nearly 60 percent of the world’s population. The fastest growing markets are Southeast Asia, Latin America, and Africa & Middle East.
The report says Southeast Asia is the fastest growing mobile wallet region, where use will rise by 311 percent between 2020-2025, reaching up to 439.7 million wallets in use in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam from 141.1 million in 2020. The rise in e-Commerce and dominance of super-apps like Grab and Gojek, particularly in markets such as the Philippines and Indonesia, is accelerating mobile wallet adoption.
The report says China reaches maturity while Japan, Korea and Taiwan are set for hyper-growth. According to Boku, the Far East and China will continue to be the largest mobile wallet region in the world, and had 1.34 billion users in 2020. Market saturation is resulting in slowing growth in China, with a CAGR of just 2.2 percent per year. Markets including Japan, Korea and Taiwan will continue to see accelerated adoption of mobile wallets, with 98.4 percent market penetration by 2025.
The report says Africa and the Middle East is the second biggest mobile wallet market and expected to expand by 147 percent between 2020-2025. This is driven by higher use of mobile money services such as M-Pesa, which are increasingly offering additional services such as access to e-commerce.
Boku said Latin American growth is being supercharged by e-commerce. This region is set to increase mobile wallet use by 166 percent between 2020-2025. The region had long been held back by consumers' preference for cash-based payments and comparatively lower smartphone penetration, it said.
Boku predicts 65 percent growth in Western Europe and 50 percent in North America by 2025. Markets such as the UK are seeing a rise in card-based mobile wallets as people adopt contactless payments because of the pandemic.
The growth and bifurcation of mobile wallet use presents both an opportunity and challenge for merchants. The number of mobile wallets transacting over USD 1 billion per year is set to grow by 27 percent from 54 wallets in 2020 to 69 wallets by 2025. This provides a lucrative opportunity for merchants looking to acquire valuable customers, many of whom only use mobile wallets.
Not only are consumers using mobile wallets more, they are using more mobile wallets. Consumers in high growth markets such as India and Indonesia use an average of 2.74 wallets. This means that merchants need to accept wallets but also that they need to ensure broad coverage in each target market.
