Analysts at Graphical Research predict that mobile wallets are set for stellar growth in Europe in the coming years – with the rise of digital seen across the pandemic as just the start
The European mobile wallet market is set to witness considerable growth over the coming five years, driven by digital disruption and generational shifts in consumer behaviour as millennials embrace the convenience of digital payments. In fact, mobile wallets are being used more and more by present-day customers for shopping online as global e-commerce sector has proceeds to expand day-by-day.
The mobile wallet industry is also experiencing substantial market disruption with the growing inexpensive mobile penetration and the rising availability of VoLTE. It is projected that by the year 2025, smartphones are likely to account for around 77% of the devices connected to the internet. Consequently, banking establishments as well as technology players are developing several exclusive mobile wallet applications for smartphones, creating new opportunities for Europe mobile wallet market expansion.
With respect to type, the open mobile wallet segment is likely to grow at a respectable CAGR of 15% over the forthcoming time period. This anticipated growth is ascribed to the surging investments by telecom and banking sectors for developing open mobile wallets. The banking sector is witnessing frequent change owing to introduction of innovative product offerings and rapid digitalisation. Various traditional banks are facing tough competition from novel Fintech startups and are actively focusing on the incorporation of mobile technologies to enable payments as well as to surge customer retention.
In terms of ownership, in 2019 the tech companies ownership segment held around 65% Europe mobile wallet market share and is likely to follow strong growth impetus over the forecast time period. This anticipated growth is ascribed to the large-scale investments made by tech firms in mobile wallet technology. With growing online engagement and increasing penetration of smartphones, tech companies are nudging consumers more closer toward mobile payments.
It is projected that, by the end of 2023, around 63 million Europeans would use mobile wallets, this would be a nearly 22% increase from the 2019 numbers. Key technology players like Facebook, Google, Tencent, and Alibaba have developed wallets further creating new business opportunities in the segment.
Based on technology, the NFC segment is likely to grow at a respectable CAGR of more than 23% over the forecast time period owing to the surging use of contactless payment by subscribers across Europe owing to the simplicity of the technology. Mobile wallets empowered by NFC have an extra layer of security which is considered as the main driving factor accounting for the significant segment growth. NFC uses message authentication, which safeguards as well as establishes a safe communication channel between end-user devices and POS. This technology is enhancing customer satisfaction and business profits, thereby fueling the overall industry outlook.
On the geographical front. In 2019, the UK held nearly 20% of the overall Europe mobile wallet market share and is likely to follow a healthy growth path over the coming years. With a greater number of people becoming aware of the benefits of digital-only banks as well as the varied range of services designed to make banking simple and much more transparent, traditional banks in the country are trying to copy their offerings.
This has further encouraged providers of mobile wallet services as well as traditional banking institutions across the UK to introduce their own mobile wallets. Over time, customers in the country have developed a lot of confidence in mobile payment system, and physical cash use is undergoing a significant drop.
Morgan Chase & Co., Apple Inc., American Express Company, PayPal Holdings, Inc., Visa Inc., Amazon.com, Inc., First Data Corporation, Skrill Ltd., Allied Wallet, Inc., Vodafone Group PLC, AT&T Inc., Google LLC, Samsung Electronics Co., Ltd., Wells Fargo & Company, Barclays plc, Mastercard Incorporated, Ant Financial Services Group, Due Inc., and Tencent Holdings Limited among many others are some of the key players operating in the Europe mobile wallet market.
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