Could e-wallets deliver a cashless economy?
Although the world’s first recognized physical currency was manufactured in China several thousands of years ago, transactions in China look considerably different today. Some might say that we’ve not come far in 3,000 years from paying in gold coins to the coins and banknotes we use today. However, when you consider that the 21st century has ushered in a new digital payment ecosystem that’s accessible worldwide, it’s fair to say that things are starting to move a little bit faster on that front.
In fact, the data suggests that we’re as closer as we’ve ever been to a ‘cashless economy’. What do we mean by cashless? Transactions completed using digital wallets known as e-wallets or mobile wallets. It’s the perfect blend of the most innovative and advanced technological industries of our time – telecommunications, fintech, and retail. According to Statista’s mobile POS data, over a third (35.2%) of Chinese consumers made at least one transaction via their smartphone device in 2019.
Sweden is just a few years from becoming a cashless society
The digital wallet phenomenon isn’t restricted to the Far East, it’s taking hold in a big way in the western world too – particularly in Scandinavia. The Swedish were the first European nation to develop banknotes for use in their local economy by merchants and consumers alike. This dates to the mid-17th century but wind the clock forward to the present day and the Swedes and their Nordic neighbors are innovating again by pushing to become the first cashless society. For several years, the Swedish public has been unable to use banknotes and coins to pay for public services like buses, while trend reports show that most Swedish merchants have fully embraced digital transactions as just 1% of payments are now accepted in cash. It’s not the first industry the Swedes have sought to set trends in, with Stockholm also playing a key role in Europe’s green energy future.
It’s a similar story in nearby Denmark where just 1% of consumer transactions are made using coins and banknotes, while Finland (2%) and Norway (4%) appear to be ahead of the curve too. The biggest challenge is to get merchants and service providers to embrace e-wallets and other digital payment methods. Digital wallets like PayPal and Apple Pay are the easiest for online businesses to trust. Similarly, they are the safest and most convenient option for consumers, given that they hold their bank account details securely. In Sweden, there are digital wallets paving the way for increased access to finance, with Klarna offering an on-demand buy-now-pay-later service that’s inspired the launch of PayPal Credit, with no formal credit checks necessary.
When traditional organizations adopt new payment technologies
The best measure of the prevalence of digital wallets is to look at traditional industries and organizations and how they are handling transactions. Impressively, last Christmas the Salvation Army embraced e-wallets by accepting charitable donations at collection points via Google Pay and Apple Pay. It marks a seismic shift from the charity’s cash donation boxes, but none of this would be possible without the widespread roll-out of mobile internet connections to bring mobile payments into the mainstream. Aside from donations, consumers are increasingly able to spend their hard-earned money on their passions via mobile wallets too. In the UK, Vue launched mobile tickets using Google Pay via partners Urban Airship, after finding that half of its app transactions at cinemas were made via mobile wallets instead of its native app.
In other entertainment sectors like iGaming, having a PayPal wallet is no barrier to playing and even gaining access to the latest bonuses. With online casinos such as Betway, a company that has forged a strong reputation for its secure gaming environment, new customers can use PayPal accounts, as well as debit and credit cards, to validate their bonuses. However, it’s worth noting that e-wallets like Skrill and Neteller are not included in the promotion.
The fact that you may not have heard of Skrill or Neteller merely demonstrates the rapid rise of digital wallets – and they are genuinely the tip of the iceberg. Once Generation Z (Gen Z) – the generation born between 1999-2012 – overtakes the population of the millennial generation, we’ll see a global population dominated by tech-exposed consumers, with trends like smart speakers and home assistants sure to spark a smart spending boom at home. Shoppers will become savvier and self-aware about the security and efficiency of their digital transactions, which should drive digital and mobile wallets to even greater heights.