The Worldpay from FIS 2020 Global Payments Report predicts that digital wallets will represent half of global eCommerce sales by 2023, while ‘Buy Now, Pay Later’ (BNPL) methods emerge as the fastest-growing online payment preference over the next five years.
The report indicates that even as global eCommerce continues to grow to an estimated US$5.9 trillion by 2023, the marketplace is rapidly changing as digital and mobile wallets transform customer behaviours online. Many diverse factors are driving this change, including the urbanisation of emerging economies, widescale technological adoption, the increasing spending power of Generation Z customers, and the rise of social commerce.
Smartphones are becoming the new wallet for many customers who are forgoing traditional payment methods in-store, according to the Worldpay report. In 2019, 22% of in-store purchases globally were conducted using mobile/digital wallets - up from 16% in 2018. Market forecasters project that more than one billion shoppers will make a digital or mobile wallet payment in 2020.
“Mobile commerce is set to make up half of all global eCommerce spending in five years because the reach and scale of the technology means you can shop and buy anywhere,” said Shane Happach, EVP, head of global eCommerce at Worldpay Merchant Solutions, FIS. “If a merchant’s payment strategy doesn’t consider mobile-first payment methods like digital wallets and ‘Buy Now, Pay Later’ options, they are going to lose market share to their competitors.”
Global payment trends
While digital wallets are becoming a preferred choice for online and in-store commerce, BNPL methods are rapidly emerging as a global payment option. BNPL payment services such as Afterpay or Klarna allow consumers to delay payment or to pay by instalments over a set period.
The FIS report found that BNPL is the fastest-growing online payment method in Australia, Brazil, France, Japan, the Netherlands, the UK and the US, and is set to grow at a 28% compound annual growth rate globally over the next five years. The Europe-Middle East-Africa (EMEA) region leads the global market in terms of BNPL usage, comprising 5.8% of total eCommerce purchases and expected to grow to 8.9% by 2023. North America currently comprises less than 1% of eCommerce BNPL purchases and is expected to advance to 3% by 2023.
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