The Rise of Mobile Wallets and Cashless Payments

These days, having an empty wallet doesn’t need to get in the way of paying for your shopping items. Who needs a wallet when you’ve got your smartphone, right?

Mobile payments have been gaining traction amongst consumers globally. The world is seeing more and more cashless payments out of convenience, as well as the various features that these applications offer. So much, so that in-store mobile payments are anticipated to reach $503 billion by 2020, demonstrating a compound annual growth rate (CAGR) of 80% between the years of 2015 and 2020.

Cashless systems allow for payments without the use of physical cash. More typical examples include the use of debit or credit cards. Now, people have moved on from cards to mobile alternatives like e-wallets and credit apps. 

The way it works is simple: a customer can make a purchase then transact their payment through their preferred apps, which are either pre-loaded with a certain amount or settled after a certain amount of time. This ease of use, as well as the perks of having transactions online—like, visible records, possible rewards and discounts—are convincing people to use mobile payments more.

 

The Rise of Mobile Wallets and Cashless Payment

Technological developments are non-stop; so much so that it has paved the way for people across the globe to make payments without the need for hard cash. Cashless transactions have been around for a while in the form of credit and debit cards. Now, mobile wallets and credit apps are poised to take over.

Mobile payment apps allow you to maintain and access financial details and accounts. Through these apps, anyone can make payments through their smartphone. They also provide the convenience of not needing to have cash on hand and having digital records of all your transactions. Additionally, you can avail of different benefits like perks, rewards, and discounts.

Facing the Facts

Mobile payments have become a game changer in the global economy, with the use of mobile payments being anticipated to increase a CAGR of 20.5% between the years 2016 and 2024. 

This shift is palpable. In fact, 80% of businesses see mobile payments as a fundamental aspect of their business strategy, and 70% of millennials users cite rewards and exclusive discounts as reasons to consider using mobile wallet apps. This mindset has also reached the public as more than 50% of smartphone owners reportedly don’t like carrying around cash or debit/credit cards anymore.

The top countries with the highest penetration of mobile wallet usage are China, Norway, the United Kingdom, Japan, and Australia.

China

China boasts a 47% mobile payment penetration rate, with a sizeable amount of the population making use of mobile wallets and QR codes to pay for purchases in the place of credit cards. The Chinese app WeChat Pay is the world’s largest mobile payment app with over 1 billion active users, followed by Alipay, with its claim of around 1 billion users, as well. These close figures are a statement of the prevalence of mobile payment in the country.

Norway

Norway’s 42% mobile wallet penetration is one of the highest rates among European nations. This can be attributed to the country’s innovative mindset, resulting in its banks cooperating with their customer bases to develop their payment platforms. Payment platform Vipps reportedly has 3.3 million users, representing over 75% of the country’s population.

United Kingdom

In the United Kingdom, cashless transactions are on the rise, as card payments overtook cash with a penetration rate of 24% in 2016. Additionally, the country saw an estimated £975 million spent in over 126 million store transactions in 2017 through mobile. 

Japan

Like China, Japan’s rapid development in the tech industry has led to approximately a fifth of the country’s smartphone users adopting mobile wallets. Providers like Yahoo Japan and SoftBank’s PayPay spent around $182 million for two separate cashback campaigns to entice more people to make use of mobile payment services.

Australia

Australia’s mobile wallet penetration is pegged at 19%, with smartphone users citing convenience as the reason for the switch. Commonwealth Bank in Australia reports that the number of customers using mobile wallets has reached 16.8 million between January to June of 2018. It is also expected that more Australians will enjoy using the bank’s tap-and-pay functionality—initially only allowed for Mastercard owners—as it is now extended to Visa owners, using their devices to pay. 


Wrapping it Up

Keeping up with the pace of tech developments, going cashless is soon to be a part of your day-to-day life. Whether you’re buying groceries or covering this month’s utility bills, mobile wallets give you the convenience of payment in the palm of your hands. Aside from mobile wallets, cashless transactions are possible through smartphones with credit apps like Cashalo. 

While 59% of Filipinos have smartphones, only 31% of the population makes use of mobile payment methods. With consumers increasingly becoming more tech-savvy, and with online shopping on the rise in the country, the demand for cashless transactions is likewise poised to explode. Cashalo is spearheading ways to deliver convenient cashless transactions and financial inclusion in the Philippines.