Voice of the Industry

Will the digital wallet replace the physical payment card?

Monday 23 October 2023 09:14 CET | Editor: Raluca Ochiana | Voice of the industry

Mark Beresford and Elisabetta Nadal from Edgar, Dunn & Company discuss the future of digital wallets as consumers’ preferences shift from physical cards to digital wallets stored in their smart devices.

Digital wallets (also known as e-wallets) have been gaining popularity worldwide as they offer consumers numerous benefits, including convenience (without the need to carry physical cards or cash), contactless payments, enhanced security, and the ability to integrate multiple payment methods and loyalty programmes into a single app. With the proliferation of smartphones and internet connectivity and consumers increasingly embracing mobile technology and seeking streamlined payment experiences, digital wallets continue to evolve and gain prominence.

In 2022, on a global basis, we estimated for every five transactions, three were conducted using a physical card, whereas two were through a digital wallet. Transaction value through digital wallets was USD 50 trillion in 2022 – and is expected to reach USD 96 trillion by 2030. Digital wallet adoption would vary across different regions and countries. Some countries, particularly those with advanced digital infrastructure, such as North America and Europe, have already seen a significant shift towards digital payments. Meanwhile, others may need more time to transition due to factors such as technological limitations or cultural preferences. 

In this article, EDC has conducted a regional analysis of the adoption of consumer digital wallets compared with physical cards. 

Here, EDC has forecasted the expected growth and a definitive shift from physical payment cards to digital wallets by 2030.

We ought to mention some challenges that were met in this analysis. Firstly, the availability of data about digital wallets in certain regions and countries is not always reliable. Secondly, how digital payments wallets are funded is commonly by a traditional credit or debit card. This can lead to some degree of double counting of the transactions. We had to take this into account and draw on our in-house knowledge and experience of local market conditions and regional variances. Lastly, the third challenge encountered was the diversity of digital payment wallets and how they are defined. Importantly, the infographic below encompasses a broad definition of digital wallet, whereby focusing on consumer wallets, including stored value wallets, and passthrough wallets that are open-loop or universally accepted, but excluding closed-loop wallets issued by a particular merchant or retailer.

The list of available digital wallets is growing, and in this analysis, we included Alipay, Amazon Pay, Apple Pay, Click to Pay, G-Cash, Google Pay, Masterpass, M-Pesa, PayPal, Paytm, Samsung Pay, Shop Pay, Venmo, Visa Checkout, and WeChat Pay, among the others. This is not meant to be an exhaustive list but an illustration of the type of consumer digital wallets considered in this analysis.

Figure 1: Regional overview of physical vs digital 

EDC Regional overview of physical vs digital

Source: 2023 EDC Analysis 


The infographic above shows that developing and emerging regions are leading the way in terms of digital wallet usage. Africa has a huge number of digital wallets, whereas physical cards are not widely available or even accepted. Therefore, Africa is a good example where digital wallets have taken a technological and consumer behavioural leap and skipped the physical card. Similarly, in APAC, the shift to digital wallets has largely been driven by China, where Alipay and WeChat Pay are dominating consumer payments. In both the Africa & Middle East and APAC regions, the digital wallet usage is over 71%. 

Digital wallets have evolved at different paces in different markets. Their adoption varies across different regions, as illustrated by the above infographic. Usage can be influenced by technological infrastructure, regulatory environment, cultural preferences, and consumer behaviour. For instance, PayPal has a significant presence in Germany as it entered the German market relatively early and established itself as a trusted and convenient payment option for ecommerce, where local physical cards were not ecommerce friendly. 

Kenya has witnessed a remarkable adoption of digital wallets, particularly with the success of M-Pesa. Nordic countries, including Denmark, Sweden, Norway, and Finland, have seen widespread adoption of mobile wallets. MobilePay in Denmark and Swish in Sweden are popular examples. 

India has witnessed significant growth in digital payment wallet adoption, driven by the government’s push for digitalisation and the demonetisation of certain currency notes. Wallets like Paytm and Google Pay have gained popularity, and they are commonly used for person-to-person transfers, bill payments, ecommerce transactions, and even offline payments at merchants through QR codes across many cities in India. This increase in popularity was mainly determined by Paytm’s support of UPI (Unified Payments Interface), which, in turn, is backed by the National Payments Corporation of India (NPCI). 

G-Cash, a popular digital wallet in the Philippines, was first launched in October 2004. Over the years, G-Cash has expanded its services and features, including making online and in-store payments, purchasing goods and services, and even investing and saving money. It has become one of the leading digital wallets in the Philippines, offering convenient and accessible financial services to millions of users. 

Digital wallets support a range of payment methods, such as credit cards, debit cards, bank transfers, prepaid cards, and even cryptocurrencies. Some wallets specialise in specific payment methods, while others offer compatibility with multiple methods. This diversity allows users to choose wallets based on their preferred payment options. Within the EDC Retail Practice, we believe that it is important for merchants to evaluate the costs and benefits of each digital wallet before deciding which ones to support, as supporting too many digital wallets can also lead to additional costs and complexities in payment processing and reconciliation – not to mention a cluttered checkout or exclusion of any specific segments of wallet users within a physical store. 

Figure 2: Growth of digital wallets vs physical cards 

EDC Growth of digital wallets vs physical cards

Source: 2023 EDC Analysis 


The growth of physical cards in terms of Gross Dollar Volume (GDV) is estimated to be at most 10% until 2030 in four of the five regions. Only LATAM shows a CAGR of 12% on the GDV for physical card transactions. On the other hand, the GDV growth for digital wallets (for ecommerce and offline/in-store) shows impressive double-digit growth in Europe (11%), MEA (18%), and LATAM (23%).

North American consumers appear to be still in love with their physical cards, since the growth of the GDV for digital wallet transactions is comparable to that of physical cards, with an expected 8% CAGR from 2022 to 2030. 

In APAC, digital wallets, with 73% of transactions made through this payment method, are outperforming physical cards. The expected growth of digital wallets in APAC is 9% CAGR from 2022 to 2030. Furthermore, in 2030, the APAC digital wallet GDV is expected to be almost 33 times the digital wallet GDV of transactions of the other four regions combined, as China, India, Japan, South Korea, Singapore, Malaysia, and the Philippines are the early digital wallet adaptors. For this reason, the scale of the graph above had to be adjusted to make a side-by-side regional comparison possible. 

Click to Pay is another example of digital wallet, developed by EMVCo and owned by American Express, Discover, JCB, Mastercard, UnionPay, and Visa, which manages the EMV specifications for chip-based payment cards. Launched before the COVID-19 pandemic, Click to Pay is hoped to simplify the process with one standard digital wallet instead of six differently branded digital wallets. Visa has already announced that it is phasing out Visa Checkout and transitioning to Click to Pay as its primary digital payment solution. Similarly, Masterpass (from Mastercard) is expected to be replaced by the Click to Pay solution moving forward. This could be a defensive strategy as the Asian digital wallets spread from the East to the West, gathering pace along the new digital silk road. 

Digital wallets are truly a global phenomenon and have reached mass market adoption in many markets; however, they cater for specific regions, adapting to local regulations, market needs, and consumer preferences. This resulted in the development of wallets with localised features, language support, and integration with local payment systems. 

For any merchant, accepting too many digital wallet options can potentially confuse customers, especially if they are not familiar with the different solutions available or do not understand how to use them. This can lead to a frustrating customer experience and may even cause some customers to abandon their purchases altogether. We are already seeing this in the more mature digital payment markets. Nevertheless, having multiple digital wallet options can also provide customers with greater flexibility and convenience. 

To mitigate confusion and ensure a positive customer experience, it is important for merchants to clearly communicate which digital wallet solutions they support, as well as provide clear instructions on how to use each one. Merchants can also consider offering guidance and support to customers who may be unfamiliar with digital wallets or need help when choosing the best option for their needs. 

In summary 

The success of any digital wallet ultimately depends on its ability to meet the needs of both merchants and consumers, as well offering a seamless and secure payment experience. By 2030, the choice of digital wallets will continue to grow with increased consumer adoption. The ability to integrate and accept them is becoming more complex for merchants. As the payment landscape continues to evolve, merchants and consumers will continue to demand innovative and convenient payment methods that meet their specific needs. This could lead to the development of new wallets with different features and capabilities – or the evolution of existing wallets to better meet the changing needs of the market. The payment function is only the tip of the iceberg for digital wallets. There are many more consumer and merchant financial services that are expected to be embedded in digital wallets in the next wave of digital innovation leading up to 2030. 

Will the digital wallet replace the physical card? As the physical card is not expected to replace cash, the digital wallet is not expected to replace the physical card – however, the life of the physical card is limited. By 2030, we will see the digital wallet as a sophisticated and preferred payment instrument that provides a lot of non-payment-related services for consumers.

This editorial piece was first published in the Payment Methods Report 2023, which provides an in-depth overview of the latest worldwide developments in how people pay, the payment methods space, the innovative technologies that these methods work upon, and the best strategies on how to win at conversion and retention.

About the authors

Mark Beresford is a Director at Edgar, Dunn & Company (EDC) and has over 30 years of strategic consulting experience in the payments sector. He is responsible for the company’s Retailer/Merchant payments practice, working with omnichannel merchants and payment service providers across the globe.

Elisabetta Nadal is a Business Analyst at Edgar, Dunn & Company (EDC) based in the London office. Since joining EDC, she has worked on global projects for international issuers, card payment schemes, and payment technology companies. She specialises in sizing and forecasting the growth of a variety of payment products, including commercial card programmes and consumer digital wallets.

About Edgar, Dunn & Company (EDC)

Edgar, Dunn & Company (EDC) is an independent global payment and fintech consultancy. The company is widely regarded as a trusted adviser, providing a full range of strategy consulting services, expertise, and market insights. EDC expertise includes M&A due diligence, legal and regulatory support across the payment ecosystem, fintech, mobile payments, digitalisation of retail and corporate payments, and financial services.

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Keywords: payments , payment methods, digital wallet, e-wallet, contactless payments, ecommerce, commercial card, merchants, fintech
Categories: Payments & Commerce
Companies: Edgar, Dunn & Company
Countries: World
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