Mobile wallets are becoming increasingly popular for their convenience, security and ease of use. As more businesses and consumers choose this technology, it’s important to understand the benefits of mobile wallets, their features, types, used technologies, and how mobile wallets work.
Mobile wallet market statistics
The rapid growth of consumer mobile and P2P payments is driving the global growth of mobile international payment services. COVID-19 has also accelerated the adoption of mobile wallets, with many consumers seeking to avoid physical contact and use cashless payment methods instead.
Here are some recent statistics on the mobile wallet market:
- According to a report by Allied Market Research, the global mobile wallets market size was valued at $1.40 trillion in 2020 and is expected to reach $7.58 trillion by 2027, growing at a CAGR of 24.8% from 2021 to 2027.
- As of 2021, there were over 2.8 billion mobile wallet users worldwide, and this number is expected to grow to 4.8 billion by 2024, according to Statista.
- Due to Global Data, in 2021, the global market value of mobile wallets was $55,679 billion, an annual increase of 28.3%.
What makes mobile wallets extremely popular?
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Convenience
These software programs allow users to make payments quickly and easily using their smartphones, without the need to carry cash or credit and debit cards.
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Security
They use advanced encryption technology to protect users’ personal and financial information, reducing the risk of fraud or identity theft.
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Rewards
Many e-wallets offer loyalty programs or cashback rewards, which incentivize users to use the app and make purchases.
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Integration with other apps
Mobile wallets often integrate with other apps, such as ride-sharing or food delivery services, making it easy for users to make payments within those apps.
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Contactless payments
A virtual wallet supports contactless transactions, which have become increasingly popular during the COVID-19 pandemic as a way to reduce the spread of germs.
Now, let’s take a closer look at what a mobile wallet is and its features.
What is a mobile wallet?
A mobile wallet is a digital software program that is stored on customers' mobile devices and used to make payments and transfers with just a few taps. It eliminates the need for carrying cash or physical credit cards, as it allows you to shop online, store debit and credit cards, loyalty cards, and other forms of contactless payment. Mobile wallets are powered by NFC (Near-Field Communication) technology, which enables your device to communicate with another device to transfer data. The digital wallet serves as an alternative to the traditional physical wallet.
5 most popular mobile wallet apps
1. Apple Pay
- Platform: iOS
- Apple wallet is widely used for iPhone and Apple Watch users. Apple pay enables contactless payments, online transactions, and integration with Apple services.
2. Google Pay
- Platform: Android phones and other devices (and iOS with limited features)
- Google wallet supports mobile payments, multiple cards, peer-to-peer transfers, online purchases, and loyalty cards.
3. PayPal
- Platform: Android, iOS
- A globally recognized payment service offering a mobile app for managing payments, transfers, and even in-store purchases.
4. Samsung Pay
- Platform: Android (Samsung phones)
- Samsung wallet supports both NFC and MST for payments, making it widely accepted at retailers globally.
5. Venmo
- Platform: Android, iOS
- Popular in the U.S., Venmo allows users to send and receive money, split bills, and pay for services, with a social feed feature showing transactions among friends.
These apps are leading on the market today due to their widespread availability, ease of use, and secure payment processing.
Mobile wallets are transforming how we manage not just payments, but all aspects of daily life. With the ability to store event tickets, membership cards, boarding passes, hotel key cards, digital car keys, and train tickets, they offer unparalleled convenience and security. This digital shift eliminates the need for physical documents and cards, streamlining our everyday tasks while keeping everything in one easily accessible place.
How does a mobile wallet work?
A mobile wallet is a digital payment system that stores payment information, such as credit card details, on a mobile device, so the customer does not need to carry physical wallets. Here’s how it works:
1.Setup
The user downloads and installs the mobile wallet app on their mobile device and adds their personal payment information.
2. Payment
To make a payment the customers select the payment method, and tap or scan their mobile device on a point-of-sale terminal or another mobile device with NFC capabilities.
3. Security
Digital wallets use various security measures to protect payment information, such as encryption, two-factor authentication, and biometric authentication, such as fingerprint or face recognition.
4. Integration
Mobile wallets can also integrate with other apps, services, and loyalty programs, enabling users to make payments, earn rewards, and manage finances from a single platform.
Different types of mobile wallets
There are several different types of mobile wallets available. According to technologies behind the software, the most popular are contactless wallets, which use NFC to communicate with another device. Other types of digital wallets include a digital wallet, which are stored on your mobile device, and cloud wallets. Additionally, there are hybrid wallets, which combine the features of digital and cloud wallets.
According to functionality we can highlight three types of virtual wallets:
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Closed mobile wallets
These are proprietary wallets provided by a specific company, such as Amazon Pay.
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Open mobile wallets
Open wallets are more flexible that allow users to store multiple payment methods, set up a default card, and are not tied to a specific company. Examples include PayPal.
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Semi-closed mobile wallets
These wallets are provided by a specific company but can be used to make payments at multiple merchants. In order for merchants to accept payments from these wallets, they must sign an onboarding agreement with the issuer of the wallet. Paytm Wallet is one of the most popular semi-closed wallets.
The choice of wallet type depends on the needs of the users and the company. For example, if you are engaged in e-commerce, then a closed wallet can be a convenient solution for you and your customers, like Amazon Wallet.
Technologies behind mobile wallets
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QR codes
QR code serves as a contactless payments in which a special image is scanned by a mobile app. It is an alternative to digital money transfer at the point of sale through an online payment platform to provide in store purchases. Customers can use their device’s camera and the wallet’s scanning function to make purchases for in store payments. To complete a transaction, this technology uses the information about the merchant and payment processor contained in the bar-coded image. It is predicted that by 2025, 30% of all smartphone owners will use QR codes to make payments.
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Near-field communication (NFC)
Near-field communication is the technology that enables Tap to Pay technology. It is a contactless payments that allows users to complete purchases by tapping their smart devices (like a smartphone or smartwatch) against a point-of-sale (POS) terminal. NFC allows two devices, such as your phone and a payment terminal, to communicate with each other while in close proximity (about an inch and a half, or 4 centimeters). This technology is considered secure because the data transmission between the two devices is encrypted. NFC technology uses the same security protocol as chip-enabled payment cards, making it more secure than a physical credit card.
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Magnetic secure transmission (MST)
MST uses “magnetic” signals to establish a connection between the customer’s mobile device and the point-of-sale terminal. MST replaces a card swiping with wireless transmission of magnetic waves from the user’s device, turning any card reader into a receiver for online purchases. The main difference between MST and NFT is that MST is compatible with a wider range of card readers than NFC, which only works with NFC-enabled credit card readers.
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Tokenization
Mobile wallets use tokenization to replace sensitive payment information, such as credit card numbers, with unique tokens that can be securely stored and transmitted, providing more safe transactions than a physical card.
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Biometric authentication
Many digital wallets use biometric authentication, such as fingerprint or face recognition, to verify the user’s identity and prevent unauthorized access.
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Encryption
The digital wallet uses encryption to protect users’ personal and financial information, ensuring that it cannot be accessed by unauthorized parties.
What are the must-have features of a future-ready mobile wallet in 2024?
Mobile wallets are becoming more popular due to its convenience, security, and ease of use. Customers can easily conduct transactions and send money. But, sky is not the limit, because there are a number of functionalities available for digital wallets users.
The must-have features of a future-ready mobile wallet in 2024 include:
- Enhanced security
The top priority for any mobile wallet is to ensure the safety of the user’s funds and personal information. This includes two-factor authentication, biometric authentication, and encryption of sensitive data.
- Cross-platform compatibility
The mobile wallet should be compatible with multiple operating systems such as iOS, Android, and even desktop platforms.
- Multiple asset support
A future-ready mobile wallet should support multiple types of assets such as cryptocurrencies, fiat currencies, and digital collectibles.
- Decentralized ID (DID) Support
A mobile wallet that integrates with decentralized identity solutions will allow users to have more control over their personal information and have a single point of identity for multiple services.
- Seamless integration with other financial services
Mobile wallets should be able to easily connect with other financial services, such as savings accounts, investments, and insurance. This would allow users to manage all their financial needs from a single, convenient platform.
- DeFi integration
The mobile wallet should have built-in integration with decentralized finance (DeFi) platforms and protocols, enabling users to access a wide range of financial services such as lending, borrowing, and trading.
- Analytics and insights
A mobile wallet that provides users with insights and analytics into their spending patterns and investment performance will be a valuable tool for managing their financial accounts.
- Multiple payment options
To stay competitive, mobile wallets should support a variety of payment options, including debit cards, credit cards, bank transfers, loyalty cards, and digital currencies.
- Artificial intelligence and machine learning
A future-ready digital wallet should leverage AI and machine learning to provide personalized financial insights and recommendations to users.
- Global reach
As more and more people travel and conduct business globally, digital wallets must offer seamless cross-border transactions and currency exchange.
Advantages of using mobile wallets for business
The mobile wallet is beneficial for both users and companies, providing a secure payment service and boosting users’ satisfaction. This financial software offers several benefits for businesses:
- Improved customer experience
These technologies provide a quick and convenient way for customers to make payments, which can enhance their overall experience with the business.
- Increased sales
By offering mobile wallet payments, businesses can attract more customers and increase sales, particularly among younger consumers who prefer digital payment methods.
- Reduced costs
Mobile wallet payments are often cheaper than traditional payment methods such as credit cards, which can help businesses reduce their transaction fees.
- Improved security
A digital wallet uses advanced security measures to protect customers’ payment information, which can help businesses reduce the risk of fraud and improve customer trust.
- Enhanced loyalty programs
Many mobile wallets offer loyalty programs that businesses can use to incentivize repeat purchases and encourage customer loyalty.
- Data insights
Digital wallets can provide businesses with valuable data insights on customer behavior, including purchase history and spending patterns, which can help inform marketing and business strategies.
How to create a mobile wallet solution for a payment business?
If you run a business, you can integrate mobile wallets into your payment system. This allows customers to make payments quickly and easily. Integrating a mobile wallet into a business can take time and effort, but it can provide significant benefits in terms of an improved customer experience, higher sales and lower transaction costs.
Developing payment software from scratch is a complex and time-consuming process, but you can save time and money by using a ready-made fintech solution. With SDK.finance white-label digital wallet software, you can launch your mobile wallet faster or add electronic asset accounting functionality to your existing product. Thanks to its adaptability and flexibility, our e-wallet platform is suitable for various industries and business types. You can also choose on-premise or cloud-based software versions to launch your payments business in a short time.
Watch the SDK.finance mobile app UI of our Platform, designed to empower you to create secure and feature-rich financial experiences in record time. Supercharge your mobile payment, finance or digital wallet app launch with SDK.finance:
Conclusion
Mobile wallets are becoming increasingly popular due to their convenience, security and ease of use. These software programs are extremely popular for customers and businesses worldwide thanks to their advanced features. Introducing these payment methods into your business operations can help you increase user satisfaction, boost sales and speed up the transaction process.
