Paysafe: The Evolution of Mobile Wallets

Payments are constantly evolving as companies look to create new, innovative and easy ways for consumers to make transactions. One method which has taken off in popularity is mobile wallets. 

Paysafe Limited (“Paysafe”) (NYSE: PSFE) (PSFE.WS) is a specialised payments platform. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through its capabilities in payment processing, digital wallet, and online cash solutions. With over 20 years of online payment experience, an annualised transactional volume of over $120billion in 2021, and approximately 3,500 employees located in 10+ countries, Paysafe connects businesses and consumers across 100 payment types in over 40 currencies around the world.

Jan Marc Kuelper, is SVP, enterprise sales, North America at Paysafe. An executive with more than 15 years of business and corporate development experience in the digital, social media and fintech industry spoke to The Fintech Times to explain how the payment method has and will continue to evolve:

The covid-19 pandemic has changed the payments landscape forever. One payment method that has grown in popularity at a particularly accelerating rate is mobile wallets such as Google Pay or Apple Pay. Mobile wallets require customers to register their bank card details to a smartphone which are then tokenised to create a simple and secure payment method stored within the device. Over the last couple of years, we have seen consumers across the globe embrace this alternative to traditional card payments for both online and in-store payments. For instance, research revealed mobile wallets usage jumped over a quarter (29 per cent) in the US in 2020, to 40 per cent of all smartphone users over the age of 14. More than half of US consumers are using some form of contactless payment method, which includes contactless credit and debit cards, highlighting the growing appetite for more frictionless ways of paying.

There are three clear motivations behind the growth of consumer uptake:

  • Security – Mobile wallets payments are verified using biometrics, which is more secure than memorising passwords. Card details are more strongly protected and unlike traditional debit and credit cards the payment method cannot be used if physically stolen
  • Ease of use – Stored card details means consumers don’t need to remember long card number details, or bring a physical wallet with them when shopping in-store
  • Speed – Payments can be made through a single step process that doesn’t require multi-factor authentication
Understanding the surge in consumer adoption
  • Global smartphone adoption – Owning a smartphone and having access to the internet has been an obstacle to the mass migration to mobile wallets from debit and credit cards or cash globally. However, this has become less of an issue as the number of global smartphone users increased from just 3.67 billion people in 2016 to 6.38 billion people in 2021 (80.6 per cent of the global population, and 89.7 per cent of all mobile phone users), and is predicted to reach 7.33 billion people by 2025.
  • The effect of the pandemic – As consumers and businesses veered away from using cash in the early stages of the pandemic, the need for mobile wallets and contactless cards increased. When we asked consumers in May 2021, 74 per cent told us that they were now making regular contactless payments in stores and a further 32 per cent of consumers told us that they were using digital wallets more regularly online due to the pandemic. Beyond the regions we surveyed, Asia also saw a surge in adoption. According to research carried out earlier this year, mobile wallet penetration in Thailand is 93.7 per cent, and other countries in the region are not far behind. To put this into perspective, the same research estimates mobile wallet adoption in the UK and US is 36.5 per cent and 42.8 per cent respectively.
  • The expansion of mCommerce – Not only do more consumers around the world now own a smartphone, but they are also increasingly using them as a device to access digital commerce. In the US this translates into 79 per cent of consumers using their smartphone to make at least one online purchase in the past six months. Globally, mCommerce now dominates the digital commerce landscape; the percentage of all online transactions that takes place on a mobile device has risen from just over 50 per cent in 2016 to 72.9 per cent in 2021. This figure values the total global mCommerce market at $3.56trillion this year.
Businesses supporting consumer adoption

According to our latest research Lost in Transaction: Finding competitive advantage at the checkout, 54 per cent of businesses who are buying into offering mobile wallets are seeing an increase in the percentage of their overall checkout transactions thanks to the various benefits mobile wallets provide consumers:

  • Expanded payment options
  • Quick checkout
  • Higher security
  • Consumer data protection
  • Global reach
  • Lower chargeback rates

Out of the 900 small to medium-sized businesses (SMBs) across Europe, North America, and Latin America which we asked to tell us about their plans for evolving their online checkouts in the next 12 months, 41 per cent told us that they already offered mobile wallets in their online checkout, and this growth is being driven by the US (51 per cent), UK (47 per cent), and Germany (47 per cent).

A further 36 per cent of businesses told us that they are planning to integrate mobile wallets into their checkouts within 12 months. Less than a quarter (23 per cent) of all businesses currently have no plans to integrate mobile wallets into their online checkouts.

What’s next for mobile wallets?

Taking into account the impact covid-19 has had on the way consumers are paying, it is not surprising that 61 per cent of businesses are increasing their plans to improve their checkout experience, and integrating mobile wallets to match consumer demand is going to play a vital role here. SMBs that fail to listen to consumer preferences and fail to prioritise the introduction of mobile wallets into their checkout risk losing out in an increasingly competitive market.