Key Merchant considerations for Digital Wallet adoption

The value of purchases made through digital wallets globally has increased tenfold from $1.6 trillion in 2014 to $15.7 trillion in 2024 and analysts predict continued massive increases. There were 3.7 billion digital wallet users in 2023 and three fifths (60%) are predicted to use digital wallets by 2026. Indeed, half of global eCommerce payments were made with a digital wallet in 2023 and this is expected to rise to 61% by 2027. In 2023, the latest year with full statistics available, approximately 20% of UK card users used a digital wallet for over 50% of their card transactions. No merchants can ignore this massive switch in consumer behaviour which is why all merchants need to pay greater attention to digital wallets.

Digital wallets provide consumers with tremendous convenience and an improved user experience (UX) as they reduce the amount of friction imposed at the checkout stage. Shoppers no longer need to search for their payment cards, manually enter the lengthy card credentials and risk making typing errors. Critically for merchants, purchases are completed quicker if digital wallets are used. Within a store environment this helps reduce queueing time and reduces the number of tills and cashiers required.

Today, consumers are more likely to have their smartphone with them than their purse allowing purchases to be completed anywhere, anytime, thanks to digital wallets. Merchants also benefit from higher authorisation rates, fewer failed payments and improved processing reliability when wallets are used. Our processing data shows a 7% improved authorisation rate when Apple Pay is used for a Visa or Mastercard transaction. Digital wallets also deliver enhanced Strong Customer Authentication (SCA) and do not require PIN entry for above £100 transactions.

Importantly purchase amounts are no longer restricted to the amount of physical cash being carried, which continues to decline.

The two most popular digital wallets in Europe for consumers are Apple Pay and Google Pay. Consumer adoption between these two wallets varies within the European region. From a merchant perspective, Apple Pay is more important, especially for merchants selling high-value luxury products.

The PayPal wallet is popular in many markets including the UK, but especially so in Germany where nearly five out of ten consumers had used PayPal in a store or restaurant between January 2024 and December 2024 and nearly nine out of ten for online payments. These three digital wallets all use stored bank card credentials and are therefore referred to as ‘pass-through wallets’.

Few proprietary merchant wallets are still in use, and even fewer require the pre-loading of funds. They have not seen the success of global, card credential-loaded, digital wallets perhaps because of the need for frequent repeat purchases to become automatic payment behaviour. You would have to be a very large merchant to run a successful own-brand digital wallet, and this would typically need to be fully embedded with a shopper loyalty programme.

Digital wallets have seen the most significant adoption in South-East Asia, both by consumers and merchants. Alipay and WeChat Pay have far greater adoption than Visa and Mastercard in China in this region. Alipay announced at the Merchant Payments Ecosystem (MPE) 2025 conference that it now has 1.6 billion wallet users.

European merchants are increasingly looking to boost sales volumes to Chinese and Asian consumers both in an eCommerce environment and when they are travelling internationally for business and leisure purposes. Supporting the Alipay and WeChat Pay digital wallets helps merchants maximise sales revenue.

Alipay + is the latest incarnation bringing together 27 national digital wallets including South Korea’s KaKao Pay, Thailand’s TrueMoney and Malaysia’s Boost. A single merchant integration to Alipay + provides interoperability to all of these regional schemes providing further justification for merchant adoption.

Wero is a new digital wallet being launched in Europe, that is intended to replace Giropay in Germany, Payconiq in Belgium and Luxembourg, IDEAL in the Netherlands and Paylib in France, with others to follow later. European merchants should consider becoming early adopters of Wero as it offers lower transaction fees and European citizens are being encouraged to favour it over international card schemes.

Digital wallets offer key benefits for merchants, including faster checkout, improved security through tokenisation, and seamless loyalty integration. They also use a 16 digit Device PAN (DPAN) that differs from the physical card number making it harder for a merchant to have full insight into overall customer behaviour when they shop across multiple sales channels. The different card number also makes transaction identification and reconciliation trickier. A further challenge applies to merchants offering subscription services where approval rates for recurring payments are lower.

Digital wallets are no longer optional for merchants - they are essential to meet customer expectations and drive sales. New capabilities continue to be added, especially related to digital identity. They can play a crucial role in age verification, ticket validation and for customer engagement and reward programmes. Merchants are encouraged to consider all potential use cases for digital wallets and not just think of them from a payment acceptance perspective. Worldline supports all major digital wallets and European mobile payment options, and continues to see increased consumer usage and merchant adoption.