The Rise of Mobile Wallets

Mobile wallets, also known as virtual wallets, are on the rise. A mobile wallet is a virtual wallet capable of storing payment information including credit cards, debit cards, airplane tickets, and loyalty cards all on a mobile device such as an iPhone. Mobile wallet adoption has been driven in part by consumers enjoying the ability to make in-store purchases without the need to carry cash or credit cards and spend less time during the checkout process.

Mobile wallets have not only made life easier but also payment transactions seamless. E-wallets offer their customers a convenient and safe way to pay bills at various outlets and also the ability for peer to peer money transfers. E-wallet popularity is growing, and they have begun to replace the use of cash, physical credit cards, loyalty cards, subway cards, airplane boarding passes, and debit cards in our physical purse or wallet.

Technological advancement has been explosive in the payment sector and so has the growth of mobile wallets. Users of mobile wallets often point to the convenience factor of paying for goods and services via a smartphone, smartwatch, or other compatible devices as the primary reason behind their adoption.


As the pandemic took hold last year payment patterns changed as the acceptance of cash was thought of as a potential transmitter of the Covid-19 virus. In the place of cash, both physical cards and contactless payments were the preferred form of remittance. The fear of transmitting the virus from handling cash and card transactions continues to remain despite evidence the virus is spread mostly by airborne transmission. Social distancing has now made the use of no contact payment the preferred payment method among retailers anxious to protect their frontline staff.

Retailers had to pivot quickly during the pandemic and quickly embrace a digital interface with their customers from both a sales perspective and payment perspective. Today, utilizing and delivering on digital convenience is almost a necessity for retailers to remain in business.

The pandemic also assisted with shifting the consumers’ mindset and behavior with respect to both the sales and payment process. Now many consumers consider digital modes of payment as safe, contactless, and convenient, which may not have been the case pre-pandemic.


Mobile wallet technology has been with us for a while now. But adoption rates in the U.S. have lagged several countries, especially China. Many expected that with the launch of Google Pay and Apple Wallet in 2011 and 2014 respectively the adoption rate in the U.S. for mobile wallets would have been greater.

Today it is estimated via various surveys of U.S. smartphone users, that only about 30% of users take advantage of utilizing e-wallets. While on the other hand it is estimated to be just under a 50% adoption rate for consumers in China. The reason for the disparity between the two countries is driven in part by the Chinese government promoting and prioritizing the use of the latest technology in day-to-day life and a concentration of two primary vendors in China dominating the e-wallet market. In the U.S., the e-wallet market is more diverse and fragmented, and the consumer has been much slower to adopt the convenient technology.


Users of mobile wallets are a lucrative demographic: Nearly three-quarters (72%) of them are from a high or middle-income bracket. For marketers who wish to promote the usage of third-party systems, there remains some room for potential growth. In the U.S. the attraction to coffee has assisted Starbucks as the leading mobile app for many years before ceding the top spot recently to Apple Pay. The top spot is now occupied by a platform payment app verse a retailer.

According to Worldpay numbers, digital wallet adoption now accounts for 24 percent of e-commerce spend in the United States. Digital wallets are up against a deeply embedded credit-card-dominated structure that relies on rewards and travel services to keep consumers loyal over time. Although QR codes have proven to be a powerful tool for mobile wallets in Asia, the trend is only now making its way to the United States. QR codes have been added to the registered choice at major retailers such as Starbucks and Walmart, and their use in the United States during the pandemic has reaped significant benefits. Restaurants, for example, are using QR codes that enable customers to order and pay for meals without having to use their hands, allowing for safety and cost savings from disposable menus and less wait staff.

The formula for success in the U.S. digital wallet industry presents few unique challenges:

  • Creating loyalty and incentives to garner consumers.
  • Developing high transaction volumes between value chain participants necessitates a form of centralized infrastructure.
  • The high cost of security and enforcement to ensure good quality, low risk, and a large number of customers.

As digital wallet vendors overcome these hurdles and others, digital wallet usage will continue to gain market share in the U.S.