Mobile Wallets to Power Majority of Online Purchases by 2023, Report Predicts

More than half of all online sales will go through mobile wallets by 2023, while online installment payment plans are poised to boom, according to a new global payments report from FIS.

The Jacksonville, Fla.-based payment company’s survey of trends in the United States and 39 other countries predicted that mobile wallets will be the payment method of choice for 52% of global ecommerce sales by 2023. It also said that “buy now, pay later” plans will be the fastest-growing online payment preference over the next five years. FIS also predicted global eCommerce will rise 53% to $5.9 trillion by 2023.

Although American consumers still prefer to use their credit cards for online shopping, FIS said digital and mobile wallets were on track to surpass credit cards as the most-preferred online payment method in the United States by 2021. Credit cards have continued to dominate in-store purchases, however. In 2019, credit cards were used in 40% of U.S. consumer spending, and FIS forecasted that credit cards would be 42% of in-store purchases by 2023.

“Mobile commerce is set to make up half of all global eCommerce spending in five years because the reach and scale of the technology means you can shop and buy anywhere,” FIS Worldpay Merchant Solutions EVP and head of global eCommerce Shane Happach said. “If a merchant’s payment strategy doesn’t consider mobile-first payment methods like digital wallets and ‘buy now, pay later’ options, they are going to lose market share to their competitors.”

Major reasons for the expected growth on both fronts, according to FIS, were the urbanization of emerging economies, wide-scale technological adoption, increasing spending power among Generation Z consumers and increasing social commerce.

Buy now and pay later (BNPL) was the fastest-growing online payment method in the United States, as well as in Australia, Brazil, France, Japan, the Netherlands and the United Kingdom. FIS said it expected a 28% compound annual growth rate globally over the next five years for the method. Overall, however, the market is still relatively small.

“North America currently comprises less than one percent of eCommerce BNPL purchases and is expected to advance to 3% by 2023,” FIS noted.

“Merchants are first and foremost looking for solutions that convert browsers into shoppers. In order to do that, they need to offer the most premium checkout experience out there, which is where mobile technology is thriving,” FIS Worldpay Merchant Solutions Global eCommerce GM Casey Bullock said. “Digital wallets and ‘buy now, pay later’ represent the art of the possible in a mobile-first consumer market, giving new tools to merchants who must open new doors to shoppers looking for more flexible and personalized ways to pay.”