Global: UK Poised for Surge in Digital Wallet Adoption

UK Poised for Surge in Digital Wallet Adoption
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The United Kingdom is on the brink of a significant transformation in payment habits, with digital wallets projected to represent half of all e-commerce spending and nearly a third of point-of-sale (POS) transaction value by 2027, as outlined in a report by Worldpay.

Although digital wallets first emerged in the late 1990s, the Covid-19 pandemic served as a tipping point for adoption, with platforms like Apple Pay and Google Pay becoming preferred payment methods for Britons, according to Worldpay.

By 2027, digital wallets are forecasted to account for half of all e-commerce spending in the UK, amounting to £203.5 billion. Additionally, projections indicate that the usage of digital wallets at UK point-of-sale locations will more than double, climbing from 14% to 29% of transaction value over the next three years.

Pete Wickes, General Manager for EMEA at Worldpay, remarks, “The confluence of the pandemic and the maturation of digital wallet technology in recent years has propelled a significant surge in adoption, both globally and domestically in the UK.”

He continues, “The convenience and ease of use offered by digital wallets, whether in-store or online, are undeniable. Based on this foundation, merchants now have a tremendous opportunity to diversify their payment options to cater to customer preferences.”

However, the widespread adoption of digital wallets in the UK is underpinned by Britons’ strong affinity for traditional payment methods such as credit and debit cards, which are used by 69% of consumers to fund their digital wallets.

Credit and debit card usage remains robust outside of digital wallets, accounting for 46% of e-commerce spending and 74% of POS transaction value in 2023.

In contrast, account-to-account (A2A) payments have been slow to gain traction in the UK. For instance, A2A payments represented only seven percent of e-commerce transaction value in 2023, marking the lowest adoption rate across Europe. This lags behind countries like Poland (68%), the Netherlands (64%), and Finland (33%).

Worldpay notes that a notable difference between these markets and the UK lies in government-backed initiatives aimed at fostering trust and driving adoption, along with supporting the development of infrastructure such as real-time payment systems.

Meanwhile, Buy Now, Pay Later (BNPL) services accounted for seven percent of e-commerce transaction value in 2023 and are projected to grow at a four percent compound annual growth rate (CAGR) through 2027. Cash constituted 10% of POS transaction value in 2023 but is anticipated to decrease to six percent by 2027.

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