Global Payments Report: Digital wallets and BNPL drive ecommerce payments
The use of digital wallets has accelerated amid the pandemic and exceeded cash-based transactions for in-store payments for the first time, according to the 2021 Global Payments Report released by Worldpay from FIS
- Use of digital wallets worldwide grew rapidly in 2020
- Buy now, pay later (BNPL) scheme is fastest-growing online method of payment
- Cash for in-store payments dropped by 10% worldwide in 2020
The use of mobile wallets has become the most preferred payment method among consumers in the e-commerce market as pandemic drove online spending, revealed the latest report by Worldpay from FIS, the global payments processor.
Growth of digital wallets accelerated amid pandemic
The report showed that digital wallet-based transactions grew globally by 7% in 2020 which accounted for 44.5% of the global e-commerce market. “Digital wallets have been on the rise for years but rapidly accelerated amid the COVID-19 pandemic,” said Phil Pomford, general manager at Worldpay from FIS.
The Asia Pacific region continues to lead in the use of digital wallets at point-of-sale (POS) with about 40% of in-store payments across the region. China tops the e-commerce market in Asia in using digital wallets as means of payment method, accounting for 72.1% of e-commerce purchases. Singapore’s e-commerce market reached SGD 9.3 billion ($7 billion) in 2020 and is projected to grow by 40% over the next four years driven by mobile shopping.
The use of digital wallets has increased in other continents. North America accounted for about 10%, Latin America 6%, Europe 7%, and the Middle East and Africa region 8%.
BNPL scheme is fastest-growing online payment choice
Buy now, pay later (BNPL) scheme is a post-purchase payment method that allows consumers to transact through either interest-free instalments or pay off the invoice after a particular period. BNPL emerged as the consumers’ most preferred method of online payment and made up 2.1% of global e-commerce in 2020. BNPL’s rapid growth in the e-commerce market in Europe and North America is one of the key findings of the Worldpay from FIS report.
The report predicts that BNPL market will grow by 43% annually over the next three years. BNPL provides convenience and easy access more than traditional credit cards. BNPL removes much of the friction in purchasing. Some of these factors arise at checkout of customers which include security concerns, unexpected shipping charges and cost. It eases these concerns by not charging interest and offers staggered payments, allowing customers to try something before they commit to a full purchase.
Use of cash has fallen significantly
In 2020, the use of cash as means of payment for in-store purchases dropped by 10% worldwide and by at least half in Canada, United Kingdom, France, Norway, Sweden, and Australia. Cash payments in the United States dipped to $1 trillion in 2020 compared to $1.4 trillion in 2019. "The global pandemic has brought a cashless future closer on the horizon," remarked Jim Johnson, head of merchant solutions at Worldpay from FIS.
The volume of cash used for purchases has gradually declined amid the effects of the COVID-19 across the world. Many shops were forced to close and follow health protocols to limit the spread of the virus. Most businesses continue to adapt to the new normal by pushing contactless transactions through digital wallets and other alternative payment methods.
Keywords: Digital Wallets, E-Commerce, Mobile Wallet, Payments, Covid-19