UK Primed For Significant Increase In Digital Wallet Adoption
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The UK is approaching a significant change in payment methods, with digital wallets set to make up half of all e-commerce spending and almost a third of POS transactions by 2027.
Since Digital wallets were first introduced in the late 1990s, it didn’t gain popularity until 2019. The COVID-19 pandemic has accelerated their adoption, with the likes of Google Play and Apple Play becoming a go-to-payment type for British consumers.
Digital Wallets Is Poised For Substantial Growth In UK E-Commerce
By 2027, it’s expected that digital wallets will account for £203.5 billion in e-commerce spending in the UK. Projection also estimates that at UK point-of-sale, their usage is anticipated to more than double, growing from 14% to 29% of transaction value over the next three years.
The General Manager for EMEA at Worldpay, Pete Wickes, highlighted the significant impact of digital wallet technology. He underscores that the combined effect of the pandemic, along with the implementation of digital wallet technology in recent years has led to a significant surge in adoption both in the UK and globally.
Wickes further stated that the convenience and ease of use provided by digital wallets, whether shopping online or in-store is undeniable. Moreover, this presents a significant opportunity for merchants to diversify their payment methods to meet the needs of their customers.
Supporting the adoption of digital wallets in the UK, is the immersive connection British have to conventional payment methods such as debit and credit cards, which approximately 69% of users adopt to fund their wallets.
Digital Wallet Seeks To Enhance The Development Of Infrastructure
Debit and credit usage outside of digital wallets persist to be resilient, accounting for 74% of POS and 46% of e-commerce transaction value in 2023. Compared to the account-to-account (A2A) payments solution which has been experiencing a sluggish resilience.
For instance, A2A accounted for only 7% of e-commerce transaction value in the UK as of 2023. A2A holds the lowest adoption rate throughout Europe, falling behind Finland (33%), the Netherlands (64%), and Poland (68%).
A notable difference between the UK and these markets is initiatives sponsored by the government, which are designed to establish encourage and trust adoption, along with enhancing the development of infrastructure such as a real-time payments system.
In addition, Buy Now, Pay Later accounted for 7% of e-commerce transaction value as of 2023, and is anticipated to rise at 4% CAGR through 2027. Meanwhile, cash comprises 10% of POS transaction value as of 2023, and is anticipated to fall to 6% by 2027.
