The Benefits of a Digital Wallet

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The digital wallet can essentially take that money from your account and send it over to the merchant without any other third party really being involved because you already have money on your account. So there's no reason for the whole circle that we just went through to kind of start with the acquirer and the card network and the issuing bank. All those parties are essentially removed from the process. The costs for such a transaction would be dramatically lower.

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

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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.