The Rise of the Digital Wallet Market in the US

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We estimate that in the US, there are roughly 160 million active unique digital wallet users. That's nearly half of the US population. And then you see a continuous rise in 2021, which we believe is very interesting and important in this context because it suggests that this move that was forced by the COVID pandemic or consumers to shift from physical to digital, from offline to online isn't just temporary but more of a secular trend.

Welcome to the Big Ideas Monday Miniseries, brought to you by the For Your Innovation Podcast.

Big Ideas is meant to enlighten investors on the long-term impact of innovation. This annual research report seeks to highlight the technological breakthroughs evolving today and creating the potential for super-exponential growth tomorrow.

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To learn more, view Big Ideas 2023.

This week’s Big Ideas Monday Mini Episode focuses on Digital Wallets.

Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.

With 3.2 billion users, digital wallets have penetrated 40% of the global population. ARK research suggests that the number of digital wallet users will increase 8% at an annual rate, penetrating 65% of the global population by 2030.

As consumers and merchants adopt digital wallets, the usage of traditional checking accounts, credit and debit cards, and direct merchant accounts should decline, disrupting traditional payment intermediaries.

Cutting out middlemen, digital wallets could facilitate closed-loop transactions for more than 50% of their payment volumes, potentially adding $450 billion to the current $1 trillion in digital wallet enterprise value by 2030.

Watch the video version here.

Sources: ARK Investment Management LLC, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.