10 Facts About Digital Payments & E-Wallets (2024)

Credit card processing, e-wallets, and Digital payment trends are constantly changing. First, it was cash and checks; then, it became debit and credit cards. Now consumers are ditching plastic altogether and shifting towards another preference—e-wallets.

What is an e-wallet when it comes to credit card processing?

E-wallets, also known as digital wallets, are software-based platforms for users to store payment methods. Digital wallets eliminate the need for consumers to carry physical cards on them to buy goods and services. Whether shopping online or in person, e-wallets accommodate all different types of transactions.

There is an exception—digital wallets only work if the merchant is set up to process them. If you’re on the fence about accepting e-wallets and digital payments, this guide will show you data-backed reasons why you need to keep an open mind. Let’s dive in.

1. Half of All E-Commerce Transactions Come From Mobile Wallets

The ecommerce industry is exploding exponentially. Even prior to pandemic-related circumstances, consumers were getting more comfortable buying online, and many preferred ecommerce to in-person shopping. 

But the way people are shopping online has changed the digital wallet demand. 79% of smartphone owners have purchased something online using their mobile device in the last six months alone. 

Entering credit card numbers on a small, hand-held device is a pain. But completing the purchase with a digital wallet takes just one or two clicks.

According to Statista, 54% of all ecommerce transactions will come from digital wallets by 2026. That’s up from 44.5% just two years ago. This research is based on the total ecommerce transaction volume worldwide. 

If you’re running an ecommerce site, you must accept digital wallets to keep pace with this trend.

2. Digital Wallet Uses Will Eclipse 5.2+ Billion Users by 2026

Research suggests that 60% of the world’s population will be using digital wallets by 2026. That’s more than 5.2 billion people, up from 3.4 billion in 2020.

Why are so many people using e-wallets?

According to another study, 75% of those surveyed said they like digital wallets because the option is more convenient than carrying cash and credit cards.

Think about it. People go everywhere with their smartphones. If they’re able to pay from those devices instead of stuffing their pockets and purses with extra things they don’t need, why wouldn’t they take advantage of it?

Ease of tracking expenses and higher security both ranked as top reasons for using digital wallets as well. So consumers have definitely recognized the benefits of going digital.

3. Consumers Spend More When Using Digital Wallets

Payment methods have a direct impact on spending habits.

In fact, transaction volume rises by 23.5% once people start using mobile wallets. In addition to transaction volume increasing, there’s a 2.4% boost in overall spending.

While 2.4% might not seem significant, think about that using numbers from your business. If your company does $2 million in sales per year, a 2.4% increase is nearly $50,000.

Just by accepting digital wallets, you could increase transaction amounts by over 2%. That’s an easy way to make more money.

4. E-Wallet Market is Expected to Reach $489.3 Billion by 2030

Research shows that the global market size of mobile wallets is on pace to eclipse $489 billion in less than seven years. To put that into perspective, the mobile wallet market size was $100 billion four years ago.

The e-wallet industry is growing at a CAGR of 26.4%—which is a huge number.

This is just another clear example of the massive growth rate in the e-wallet space.

5. There Are Three Types of E-Wallets

Lots of businesses think e-wallets all fall into the same category. This is not true. Generally speaking, e-wallets are segmented into one of three categories—closed, semi-closed, and open.

Here’s a brief description of each so you can understand the difference:

• Closed E-Wallets —  Closed e-wallets are directly integrated with the issuer’s payment gateway. It’s common for airlines, hotel chains, and big-box stores like Walmart to offer closed e-wallets to customers. Closed e-wallets don’t allow for cash withdrawals or redemption; they’re strictly for purchasing within that closed system.
• Semi-Closed E-Wallets — Semi-closed e-wallets support purchasing across different platforms and merchants. They also work for online and offline transactions, including transactions at establishments that accept the wallet. Examples of semi-closed e-wallets include Apple Pay, Samsung Pay, and Amazon Pay.
• Open E-Wallets — Open e-wallets are issued directly by banks. They can only be used for purchasing goods and services up to the pre-funded amount. Users can withdraw cash at automated tellers using an open e-wallet. Users can also restock the wallet remotely as a way to fund the wallet as needed.

Basic e-wallet features like security, transaction history, encryption, etc., all remain the same across the board.

6. 89% of Americans Rely on Digital Payments

While the global adoption of digital payments is still around the 50% mark, it’s significantly higher in the United States. 

Nearly nine in ten people in the US have used a digital payment, and 62% use two or more forms of digital payments.

7. Digital Wallets Account Account For 29% of POS Transactions 

Globally, digital wallets account for 29% of all transactions at point-of-sale terminals. This number jumps to 36% when looking at North America alone.

It’s projected that digital wallets will represent 46% of POS transactions by 2026—making this one of the fastest-growing payment trends in existence. 

8. PayPal is the Most Commonly Used Digital Wallet in the US

Here’s the breakdown of digital wallet usage in the US, with PayPal leading the way:

• PayPal – 36%
• Apple Pay – 20%
• Venmo – 16%
• Other – 13%
• Google Pay – 11%
• Samsung Pay – 3%

You can read more about PayPal’s fees here.

9. 56% of US Consumers Rely on Phone Payments Over Wallets

More than half of Americans in a recent survey said they felt comfortable enough with mobile payments that they’re ok with leaving their traditional wallets at home. 

Rather than relying on cash or plastic to pay for goods and services, consumers feel that mobile wallets can get the job done.

10. 85% of US Retailers Accept Apple Pay

According to Apple, more than 85% of retailers in the United States accept Apple Pay. 

This piggybacks off our last point, which is why so many Americans feel comfortable being out without a physical wallet. With the increase in wearable technology, including smartwatches, a smartphone isn’t even a requirement to pay for something using a digital wallet.

Final Thoughts

If you’re on the fence about accepting digital wallets, I only have one question for you—why?

It’s clear that e-wallets are trending upward at a massive rate. While customers probably won’t walk out of the door right now if you don’t take their e-wallet, that might change in the coming years.

Think about how we shifted from cash to credit. Now, 50% of people don’t carry cash with them half of the time they leave their houses. For those that do carry cash, 76% carry less than $50.

In five or ten years, we might be saying the same thing about credit cards. People won’t carry them simply because they have no reason to. They just can store card details on their smartphones and wearable devices in a digital wallet. 

Businesses that can’t accommodate the needs of e-wallet users will lag behind the competition.

If you’re worried that your costs will increase by accepting e-wallets, then reach out to our team here at Merchant Cost Consulting. We’ll help negotiate your credit card processing rates on your behalf, so you don’t have to switch processors.