The global digital payment market size is expected to from USD 79.3 billion in 2020 to USD 154.1 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 14.2%.
In retrospect, we don’t have a reason to doubt this number. If anything, if we keep the current coronavirus crisis into consideration, the growth and adoption will accelerate.
Virus or no virus, the rise in contactless payments was already here. Since smartphone wallets lie at the center of how the system works, there was an obvious rise in their adoption as well. But ever since the news of how cash can carry coronavirus for days on end broke, the focus of almost everyone across the globe has shifted to digital wallets.
But what makes mobile wallets the god-send alternative to fiat currencies? The answer to this question lies in the features set. Here’s a list of features a mobile wallet app should have:
Must-Have Features of Mobile Wallets
- Multi-factor Authentication Security – The first feature that every digital mobile wallet must have is unbreachable security. One way to ensure that is through the incorporation of a multi-factor authentication system. What it means is making users go through at least 2-3 point security checks before they reach the point where they can view their account balance or send money to their peers.
- A Rewards System – One of the biggest reasons why people use digital wallets like PayPal or PayTM is their rewards systems. For every transaction that the users make from the application, they should be given a reward, which can be in the form of coupons or cashback. This alone can be a great way to keep the users coming back to the application.
- An Active Support Team – The one complaint the users almost always have with their banks is how they can be inactive at the time of need. When inside a wallet application, there are a number of things that can go wrong for a user – they might accidentally send the amount to the wrong person, they might put in the wrong amount, or the most common one – amount getting credited from their accounts but not reaching the intended person. To solve these issues and state of paranoia in real-time, there should be an active app support infrastructure.
Now that we have peeked into the features that make digital wallets famous, let us get down to the points of why we think there has come a sudden rise in the usage of mobile wallets across the globe.
The Reasons Behind This Surging Rise in Mobile Wallets
- The fear of catching the virus – Out of the fear that they would catch the coronavirus, users are refraining from using fiat currency. But this still doesn’t justify the rise in digital wallets right? Since they can always use their debit or credit cards. Well, that is the point. Users are refraining from touching anything – the atm machine, the POS machine, or any other machine that would enable them to do monetary transactions. This is the number one reason why they have directed their focus on contactless digital wallets.
- Greater information – Another thing that works in the favour of the growing adoption of mobile wallets is how well-informed the fintech users are about the benefits it has to offer. Ever since the popularity of wallets reached its climax state, customers (majorly comprising of millennials) have known how to use them and how they are many points better than using fiat currency. Those millennial class of users have also played a huge part in educating the Generation X and Boomers of why it is time to let go of fiat currency.
- Wide acceptance – Today, there is hardly any business establishment, hospital, or schools who haven’t heard of or aren’t using digital wallets. This acceptance has resulted in a rise in adoption rates from the customers’ ends as well. The convenience of not carrying cash or the zero probability of misplacing debit or credit cards added to the mass acceptance of mobile wallet apps have made people ditch fiat currency altogether.
- The backing of technology – The next factor that had and is still bringing a rise in the adoption of mobile wallets is the technology backup. The mobile wallet companies like Stripe, PayPal, etc hold the expertise to offer a 100% hack-proof application. Additionally, by integrating the application with APIs that make them a one stop platform for all booking and spending needs, companies are using their technical side to better customer experience efforts, while in turn, their customers are responding by exchanging them from their physical wallets.
How Should a Fintech Entrepreneur Respond?
The ideal response that a Fintech entrepreneur must have towards this shift in consumer behaviour should be to look for ways to expand into the business model. One thing that they must note is that social distancing is poised to be the new norm. And like almost every business under the sun, they too will have to look at ways to make their customers’ experience as contactless as possible.
We hope that up until this point, you would have been able to gauge how important mobile wallets have become in everyone’s lives and how it is the only way forward for the Fintech domain.
With that hope, let us leave you with a parting quote:
In the current environment, paying without cash is an important way to protect yourself and others against the spread of coronavirus. The increased contactless card limit is a fantastic step, however, where possible we’re encouraging our customers to use digital wallets as they have the added safety of not needing to enter a PIN on the PIN Pad no matter how much they spend, as it instead leverages touch ID or Face ID.
Kate Crous the Executive General Manager of ‘everyday banking’ at Commonwealth Bank of Australia
Do you also think that mobile wallets lie in the future of the fintech sector? Share your views in the comments below.