Higher smartphone access needed to propel digital wallets use

Digital wallets are set to account for 61% of global ecommerce payments by 2027.

Innovations and security measures are driving digital wallet adoption, but smartphone access remains a hurdle, according to David Zhang, Regional Market Insight Manager at Euromonitor International. 

Zhang highlighted that significant drivers for digital wallet growth in Asia Pacific include population changes, technological advancements, and financial inclusion efforts.

"Gen Z has been mobile," Zhang noted. "The first generation has been a key driver driving forward for digital wallet usage. Many of them have access to smartphones earlier than the access to credit cards, et cetera." He emphasised that as younger generations become increasingly reliant on mobile technology, digital wallet usage naturally follows.

Consumer reasons for digital wallet usage centre on enhanced security, convenience, wide machine acceptance, and loyalty programs. Zhang pointed out that "the security itself used to be a key consumer concern, especially given the rising incidents for the scanner frauds." 

However, digital wallet operators have significantly improved security measures over the past five years, including "more stringent EQSE, as well as two factor authentications, including the digital pins, biometrics, including facial ID and fingerprint ID.”

Despite these advancements, challenges remain, particularly regarding smartphone penetration. Zhang identified this as a critical issue for the industry's success. For instance, in the Philippines, smartphone penetration was just over 30% in 2024. 

To address this, Zhang suggested that smartphone manufacturers need to lower costs for budget phones and that financial organisations must innovate beyond smartphones, similar to M-Pesa's approach in Africa.

Looking ahead, Zhang highlighted credit card integration as a key innovation for the future. Enabling credit card usage on digital wallet platforms could significantly boost financial inclusion for SMEs. 

Furthermore, Zhang noted the impact on travel. In China, where mobile payments are widespread, foreign tourists face difficulties due to limited integration with international credit cards. "WeChat Pay, Alipay, and Union Pay have been actively collaborating with global leading card operators such as Visa, American Express, Mastercard, etc. to enable the foreign issuers' credit cards linkage to the digital wallets," Zhang said.