The Rise of Digital Wallets in a Cashless Society

As cash usage declines in society, mobile commerce has experienced substantial growth. By 2024, digital wallets are expected to surpass other online payment methods, projected to constitute more than a third of all global transactions.

The shift towards mobile wallets is largely driven by their convenience. From café counters to supermarket tills, digital wallets have become so popular that a significant portion of people now can’t imagine their life with physical wallets only. The simplicity of carrying just a phone instead of multiple physical cards is compelling.

However, accessibility remains a significant hurdle for the widespread adoption of digital wallets. While younger generations are quick to embrace new trends, older generations, who hold substantial financial power, are often reluctant to switch entirely to digital wallets. This reluctance is often due to technological limitations or a lack of knowledge.

Many countries in the EU, including the Baltic states, are leading the way in digital wallet adoption. For example, Estonia is known for its advanced digital infrastructure, allowing citizens to use digital IDs and engage in e-residency. Similarly, Lithuania and Latvia are seeing rapid growth in mobile wallet usage, reflecting the broader EU trend towards digitalization.

Despite this progress, the EU as a whole is unlikely to become a fully cashless society soon, as millions still rely on cash and traditional payment methods. Nevertheless, businesses that do not offer mobile payment options risk falling behind in the coming year.

The popularity of mobile wallets is evident in the e-commerce landscape. Many online stores offer Apple Pay or Google Pay to boost conversion rates. E-commerce channels and payment providers must adapt to market trends, which is why more companies are offering alternative payment methods to retain their customers. The same applies to payment providers. At PAYSTRAX, we started offering such payment methods in 2023, recognizing the crucial need to meet audience demands.

In conclusion, the rapid adoption of digital wallets underscores a profound transformation in payment methods, driven by the surge in mobile commerce. The Baltic countries, leading with innovative digital solutions across various sectors, exemplify this shift. Among other payment trends such as payment orchestration, the potential for a digital euro looms large, while initiatives like digital driving licenses gaining traction in other EU nations promise further evolution. To remain competitive in this dynamic landscape, businesses must swiftly embrace these changes, ensuring they are well-positioned for the future of payments.

Bjarni Thor Sigurdsson, CCO (Chief Commercial Officer) of PAYSTRAX