In the competitive world of payments, digital wallets are rapidly gaining market share, and currently account for 50% of global e-commerce spend and 30% of point-of-sale ( POS ) spend, by far the leading payment method ahead of credit cards, which account for only 22% of e-commerce spend and 27% of POS spend, according to a recent report.

Total transaction volume of digital wallets across e-commerce and POS transactions amounted to US$14 trillion in 2023 and is forecast to grow at a compound annual growth rate of 15.5% between 2023 and 2027 to reach US$25 trillion in transaction volume globally, according to the 2024 Global Payments Report from payments technology and solutions company Worldpay. However, this doesn’t mean necessarily that credit/debit card transactions are becoming obsolete.

“Consumer attraction to digital wallets isn’t a turn away from cards,” the report states. “In card dominated markets, card spend is simply shifting to digital wallets like Apple Pay, Google Pay and PayPal. Viewed in total, card transaction values are at an all-time high and continue to rise.”

Asia-Pacific

This was a similar story in the Asia-Pacific region where in 2023 consumers in the region continued to lead the world in digital wallet use online. Consumers in the region used digital wallets for 70% of e-commerce transaction value in 2023, and the percentage is expected to grow to 77% by 2027. Wallets accounted for over US$2 trillion in e-commerce transaction value over the past year in Asia-Pacific, which represented over 64% of global online digital wallet spend.

In 2023, digital wallets were the leading e-commerce payment method in five of 14 Asia-Pacific markets – China, India, Indonesia, the Philippines and Vietnam. By 2027, the report predicts that they’ll be joined by Hong Kong, New Zealand, Singapore, South Korea and Taiwan.

Asia-Pacific’s most populous countries continue to move full steam ahead when it comes to overall digital payments adoption.

India, China

In India, the region’s most populous market, the country’s Unified Payments Interface ( UPI ) instant payment system is posting record growth. UPI transactions in India, according to National Payments Corporation of India, posted a record 57% rise in volume and 44% rise in value during the financial year 2023-24 compared with the previous year.

The instant payment network is expected to expand further once cross-border capabilities have been rolled out. Already UPI has linked up with Singapore’s real-time payment network PayNow and several other countries, with expectation of further partnerships going forward.

China continues to lead all global markets in digital wallet adoption across shopping channels. Digital wallets represented an estimated 82% of e-commerce transaction value in 2023, or nearly US$1.8 trillion, and accounted for nearly two-thirds ( 66% ) of POS spend in 2023 at around US$5.8 trillion.

China’s payments market continues to be heavily dominated by three providers, the digital wallets Alipay and WeChat, which combined have a 90% market share in the country, and UnionPay, which essentially has a monopoly on card payments with a 99% market share.

Indonesia, Thailand

In Indonesia, while digital wallets are the most favored for e-commerce transactions, they are still second behind cash when it comes to POS payments. However, that is expected to soon change, with the Worldpay report predicting that by 2027 digital wallets will have a 49% share of Indonesian POS payments, thanks to the growing popularity of the country’s Quick Response Code Indonesia Standard.

Also notable in Indonesia is the growing adoption of account-to-account ( A2A ) payments, which accounted for 28% of e-commerce transaction value in 2023. Following the launch of the Bank of Indonesia Fast Payment ( BI-FAST ) service in 2021, there has been a notable uptick in A2A transactions, with the service noting that in March 2023 it had a 94% national retail payment system participation share.    

In contrast to other markets in the region, cash is still dominant in Thailand with the highest share of cash usage at 46% when it comes to POS transactions. However, this is expected to change soon with policymakers laying the framework for more digital transactions.

The Bank of Thailand, the country’s central bank, for example, has previously mentioned that it would reduce cash in circulation by half by 2026 in favour of using wallet-based payments based on interoperable quick response codes. The country expects its instant payment rail PromptPay to drive digital wallet adoption, and PromptPay has already forged cross-border linkages, most recently with Hong Kong’s Faster Payment System.