Advancements in digital technology and security coupled with the decline in cash payments accelerated by the pandemic, have led to a steep rise in the use of digital payment wallets in Europe, according to leading digital payment provider, STICPAY.
There are two types of transactions where mobile payment wallets can be used, e-commerce payments and POS payments. Europe experienced an annual rise of 14% between 2016 and 2020 in e-commerce payments and an average growth rate of 10.1% is expected to continue until 2024. This has paved the way for a rise in mobile payment wallets.
However, Europe is a very fragmented market. The region can be broken down into countries with high internet penetration and high growth in e-commerce, such as Spain and Sweden, high internet penetration and moderate e-commerce growth (UK and the other Scandinavian countries), low internet penetration but high growth (Russia and Turkey) and low internet penetration and lower growth markets such as Poland, Belgium and Ireland.
Overall e-commerce in Europe is expected to see robust growth through to 2024, from a potential low of 7.4% in Belgium to a potential high of 22% CAGR in Turkey.
This projected growth in e-commerce in Europe is exciting news for the mobile payments industry. In 2020 26.4% of e-commerce payments across the region were made using a digital wallet and e-wallets are the most used payment method in Europe’s five largest e-commerce markets: France, Germany, Russia, Spain and the UK.
This dominance is expected to continue to grow with e-wallets anticipated to account for up to 30% of e-commerce transactions in Europe by 2024.
Digital wallets have also seen their share of POS payments increasing in Europe. Cash transactions across the world fell sharply in 2020 due to the pandemic with many POS payment options closed or accepting only contactless payment methods.
Europe still lags way behind APAC when it comes to the adoption of mobile wallets for POS purchases. It is anticipated that e-wallets will account for 47.9% of POS transactions by 2024 in APAC. However, contactless mobile wallet payments shot up by more than 63% in Europe in 2020 to account for 7.2% of POS payments. Europe is still loyal to credit and debit cards, but an expected sustained CAGR of 22.9% will see e-wallets claim 13.9% of POS payments by 2024.
James Bay, Customer Service Director at STICPAY, explained the growth patterns: “What we have witnessed over the last 18 months or so is the almost total collapse of cash purchases due to the pandemic. People were buying much more online and even when physical stores were open, contactless payment methods presented much less risk than cash.
“E-wallets were already increasing in popularity, but the pandemic has accelerated the move away from cash by around three years.
“Credit and debit cards remain the most popular choice in European countries for point-of-sale purchases, but e-wallets are increasing in popularity. They are already the most popular payment method for online purchases, and it is only a matter of time before that is true for POS payments as well.
“The added layers of security to be found with reputable e-wallets, involving increased AML and KYC checks, mean a digital wallet is a much more secure way to shop. Your bank account details are never divulged, even when you are using a digital wallet that is linked to your bank account, and that gives customers the confidence that they can shop safely and securely.”