The Rise Of The Mobile Wallet

I first started blogging about smart mobile wallets in earnest in 2014. Back then, the mobile network operators were starting to get active and to try and bring the M-PESA and other experiences to the modern world. But no one wanted them. Six years later, mobile wallets are still pretty dire in most of Europe and America and, by comparison with card and cash, relatively unused.

In America for example, the first mobile wallet I talked about was Venmo, a social mobile payments app created by two guys in 2010 and acquired by Braintree and then PayPal (PYPL) mid last decade. Due to its popularity, the American banks created Zelle in 2017 , which is now processing twice the volumes of Venmo.

Source: The Payments Journal

That means these two systems combined are processing around $250 billion of payments in 2019. Sounds good? Well, not really. According to the Federal Reserve the total of credit and debit card, ACH and check payments in 2018 totaled over $97 trillion, up by more than $10 trillion from 2015. In other words, payments with the two most popular American mobile wallet systems amounted to around 0.25 percent of the total payments processed in America.

The same is true in Europe. There is no European mobile wallet. There are some good local solutions, specifically in the Nordic region, but no general wallet we all use (unless you mean Apple Pay or Android Pay). Even then, where mobile wallets have been successful are in countries like Sweden with the mobile wallet Swish, but even Swish only accounts for six percent of payments. Cards, with 58% of the market, are still dominating.

Source: Riksbank

Meanwhile, you’ve probably heard about China’s mobile wallet and payments revolution, leading to a near USD$50 trillion of payments in 2019 processed.

Source: Brookings Institute

What’s the difference between China, Europe and America, and why has China adopted mobile wallet payments so fiercely whilst Europe and America have not?

There are a range of points that could be made here – too many for a daily blog as it’s more like an essay (read Digital Human) with its 30,000 word case study on Ant Group) – but the key areas must be around infrastructure, ease-of-use, incentives and ubiquity.

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