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Digital Wallets Are Popular in the UK While Demand for A2A Payments to Be Desired Finds WorldPay

Worldpay, the global paytech, has published the findings from its Global Payments Report 2024, revealing that digital wallets are expected to comprise half of all e-commerce spending in the UK, worth £203.5billion, by 2027.

The report, analysing payment landscapes across 40 countries, also found that usage of digital wallets will likely more than double at UK point-of-sale (POS). Usage will rise from 14 per cent to 29 per cent of transaction value over the next three years. This represents £493billion total transaction value, underscoring a seismic shift in consumer behaviour.

Pete Wickes, general manager, EMEA at Worldpay said, “Consumers are not just embracing digital wallets, they are driving a revolution in the payments landscape. The combined effect of the pandemic, alongside digital wallet technology reaching a level of maturity and implementation in recent years has driven a monumental rise in adoption both globally and locally in the UK.

“It is hard to deny the ease of use and convenience digital wallets provide whether shopping in store or online. From this basis, merchants now have a huge opportunity to diversify their payments choice to meet customer needs.”

Why digital wallets?

Digital wallets emerged in the late 1990s, steadily gaining in popularity from the mid-2000s, but it was the COVID-19 pandemic that provided the tipping point for adoption globally. Now established as a ‘go-to’ payment type for UK consumers, the maturity of the technology is giving consumers the confidence to try new ways to pay. Digital wallet use in the UK is providing a welcome boost to the world’s third-largest e-commerce market, which is expected to see seven per cent compound annual growth (CAGR) through 2027.

Underpinning digital wallet adoption in the UK, however, is the deep connection Britons have to traditional payment methods like credit and debit cards, which 69 per cent of consumers use to fund their wallets. Credit and debit card usage outside of digital wallets continues to be strong.

Credit and debit cards accounting for 46 per cent of e-commerce and 74 per cent of POS transaction value in 2023. The findings reveal how established payment preferences and behaviour is carrying over to new modalities, like digital wallets.

Kate Nightingale, consumer psychologist and founder of Humanising Brands
Kate Nightingale, consumer psychologist and founder of Humanising Brands

Commenting on the findings, Kate Nightingale, consumer psychologist and founder of Humanising Brands said, “Adoption of new payment methods is a complex cognitive and affective decision-making process. Outside a considered evaluation of benefits, like convenience, self-expression and brand incentives, and risks such as safety and privacy concerns, the most impactful promoter of adoption is trust.

Ensuring long-lasting usage

However, there is a difference between initial pre-adoption trust and continuation trust. Initial trust comprises the perceived integrity, benevolence and capability of a provider. Continuation trust relies on confirmation of a customer’s expectations, ongoing satisfaction levels and the perceived usefulness of a payment method.

Social factors cannot be ignored with word-of-mouth, prevalence of the payment method in a customer’s social circles, influence by authority figures as well as the impact of partnerships and sponsorships by already trusted organisations, all shaping consumer behaviour.

Those operators, merchants and financial institutions that understand how to navigate this complex behavioural matrix to drive consideration and adoption across a range of payment methods will come out on top.”

Not all tech is quickly adopted in the UK

While the UK has been a leader in adopting new payment technology, account-to-account (A2A) payments have been slow to take hold. For example, A2A accounted for just seven per cent of e-commerce transaction value in 2023 in the UK, the lowest adoption rate across Europe, lagging behind Poland (68 per cent), the Netherlands (64 per cent) and Finland (33 per cent).

A significant difference between these markets and the UK are government-backed initiatives designed to establish trust and encourage adoption, alongside supporting the development of infrastructure like real-time payments systems.

“We advocate for a varied and vibrant payments ecosystem, recognising that diversity in payment options enhances the customer experience, supports merchant growth and ultimately boosts commerce,” added Wickes. “It’s crucial for all players in the industry to come together to continue to innovate, while maintaining and building the consumer trust that has been pivotal to the seismic shift in commerce we have seen so far.”

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