SEA named world’s fastest-growing mobile wallet region

The number of active mobile wallets is expected to reach 439.7 million by 2025.

Southeast Asia has been named as the fastest growing mobile wallet region in the world, with the number of active mobile wallets expected to grow fourfold between 2020-2025, according to a study by payments network fintech Boku.

The number of active wallets in the region is expected to reach 439.7 million by 2025, a 311% increase from 141.1 million in 2020.

The rise in e-commerce and dominance of super-apps like Grab and Gojek, particularly in markets like the Philippines and Indonesia, is driving accelerated mobile wallet adoption, Boku noted.

"Southeast Asia is one of the most rapidly digitalising regions in the world. In 2020, the region added 400 million new internet users, with 70% of the region now online. Together with consumption trends brought about due to lockdowns during the pandemic, that has led to a familiarity with e-commerce and an exponential rise in mobile wallet use," said Loke Hwee Wong, vice president and general manager, APAC at Boku.

"This is also because the region was heavily dependent on cash and bank transfer before mobile wallet use, and the convenience and accessibility, especially with stored value mobile wallets, will see Southeast Asia leapfrog the rest of the world in mobile payment adoption,” Wong said.

However, that projected 400 million active users will not even come near China’s 1.34 billion users currently. The Red Dragon continues to be the largest mobile wallet region in the world, although market saturation has resulted in slow growth in the country—just 2.2% per year, currently.

In contrast, other East Asian markets—Japan, South Korea, and Taiwan—are set for hyper-growth. Boku expects that these countries will continue to see accelerated adoption of mobile wallets with 98.4% market penetration by 2025.

Globally, it is expected that one in two people will be using a mobile wallet by 2025, or 4.8 billion active mobile wallets by that year—nearly 60% of the world’s population. By the end of 2020, there were over 2.8 billion mobile wallets in use.

In terms of growth by region Latin America, and Africa, and the Middle East were trailed SEA as amongst the fastest growing mobile wallet regions.

Cards or stored-value?

Boku observed two distinct types of mobile wallets in use: card-based mobile wallets such as Apple Pay and Google Pay, and stored value mobile wallets like AliPay and GrabPay. The latter enables consumers to transact with digital cash and are more popular in emerging markets with fast-growing e-Commerce sectors, said Adam Lee, chief product officer at Boku.

"The markets that are set to grow the fastest are those with the lowest levels of card penetration, stored value wallets are thriving. In North America and Western Europe, which are dominated by card-based mobile wallets, we are seeing the slowest growth in mobile wallet adoption, as the technology provides merely incremental benefit,” Lee said.

In the study, Lee also noted the clear bifurcation in the market between card-based mobile wallets in developed markets and stored value mobile wallets that are ubiquitous in Asia and rapidly growing in all emerging markets.

“The growth and bifurcation of mobile wallet use present both an opportunity and challenge for merchants. The number of mobile wallets transacting over $1b per year is set to grow by 27% from 54 wallets in 2020 to 69 wallets by 2025. This provides a lucrative opportunity for merchants looking to acquire valuable customers, many of whom only use mobile wallets,” he said.

However, not only are consumers using mobile wallets more, they are using more mobile wallets. Consumers in high growth markets such as India and Indonesia use an average of 2.74 wallets. This means that not only do merchants need to accept wallets but they need to ensure broad coverage across each target market, Boku’s study added.