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Digital wallets may rule the world by 2027 says Worldpay
By Leon Gettler, Talking Business >>
THE GROWTH of digital wallets is remarkable.
Research conducted by Worldpay, the global company that powers businesses of all sizes to make, take and manage payments, has found the growth of digital wallets is currently close to exponential.
Right now, digital wallets account for 50 percent of all global e-commerce transactions and it will keep growing to 2027, according to Worldpay research.
Worldpay forecasts the digital wallet will be the leading payment method online across all regions in 2027. 
Paul Koopmans, the Australia New Zealand vice-president of Worldpay, said there was a number of factors at play: the decline of the use of cash with the pandemic; the number of digital natives coming in; the extra ease and security of using contactless payments; and trust.
Mr Koopmans said digital wallets in the Asia-Pacific region now accounted for 70 percent of all e-commerce transactions. Much of this was being driven by China, where digital wallets account for 82 percent of transactions processed by apps such as WeChat Pay.
New markets tend to use local providers
Mr Koopmans said major tech companies including Apple, Google and PayPal have a large presence in the Australian, European and US markets but developing nations were now using local providers.
“The use of traditional cards, debit and credit cards, continues to grow but that’s now being used as a pass-through to digital wallets,” Mr Koopmans told Talking Business.
He said one of the big improvements for digital wallets would be in the area of fraud detection.
“As the market continues to digitise, there is a lot of pressure on the industry to ensure there is a lot of mitigation around fraud,” Mr Koopmans said.
He said artificial intelligence and machine learning would play a key role in this.
“There’s a lot of machine learning and AI involved in the patterns of spending with certain consumers but there’s also ways to alert your issuing card provider in terms of when you are going on holiday just to ensure there are no false declines when making purchases online or when you’re overseas,” Mr Koopmans said.
He said Worldpay currently covers 40 billion transactions per year.
“That obviously gives us a rich database of information that we can use (with) merchants not only to detect fraud but also to improve their authorisation rates and top line revenue as well,” Mr Koopmans said.
Geolocation, tokenisation to fight fraud
Mr Koopmans said the use of geolocation and tokenisation would also increase, for digital wallets to prevent fraud.
Mr Koopmans said Apple was one of the first to introduce tokenisation in digital wallets.
“That is where the personal account number on your card is replaced by a token and there is a lot more protection for the consumer and the merchants who handle it,” he said.
Looking at the trends ahead, he saw the digital wallets being incorporated into devices as part of the Internet of Things.
“Everyday devices you interact with will become your payment devices, so whether that’s the car you drive being able to pay for parking, or pay for petrol at the bowser, or even having your fridge as a payment device,” Mr Koopmans said. 
“You may be having payment devices in your active wear that you’re wearing outside. There will be a lot of cases that evolve over time.”
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness
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