Digital Wallets On Track to Become Fastest-growing Fintech Innovation

Digital wallets appear set to cement their position as the decade’s fastest-growing fintech innovationby becoming the world’s favorite payment option in the years ahead. With a strong innovation pipeline, the functionality can become a powerful tool for consumers on a global scale.

According to Capgemini’s World Payment Report 2025 data, which was comprised of insights from 200 payment executives throughout different markets, digital wallets are not only the fastest-growing alternative to card payments but are forecasted to attain 61% of the total eCommerce payments and 46% of in-store purchases by 2027.

This would pave the way for digital wallets to become the dominant choice of payment for consumers and opens the door to countless digital transformation integrations throughout the fintech sector.

The future is now, according to transaction metrics. Digital transactions are expected to rally to $929.8 billion in 2024, representing a seismic jump from the $802 billion recorded in 2023.

The emergence of digital wallets as a driving force in leveraging transactions both in online and offline environments can carry significant ramifications for the fintech boom and how individuals embrace open banking around the world.

With this in mind, let’s explore the rise of digital wallets on a global scale and their implications for fintech:

Digital Transformation at Scale

According to Pietro Candela, EMEA General Manager for Alipay+, the number of mobile wallets in use around the world will

accelerate to 4.8 billion by 2025, representing more than half of the world’s population.

Much of this growth has been experienced in Asia-Pacific nations like China and India, which have seen adoption rates climb higher thanks to the mass use of Alipay and WeChat Pay regionally.

In Western economies, the United Kingdom is currently outpacing the United States for digital wallet usage, with one in three adults using mobile payments like Apple Pay and Google Pay for transactions.

However, many of the benefits of digital wallets will be felt in regions like Africa and Latin America, which are poised for rapid growth in adoption thanks to the technology helping to meet the challenge of serving underbanked populations.

We’re already seeing leading banks looking to utilize digital wallets to build more financial inclusivity around the world.

Mastercard Pay Local was launched in November 2024 in a bid to help cardholders link their credit or debit cards to a local digital wallet, helping to leverage transactions at merchants with ease or top-up prepaid accounts. This technology can be expanded into open banking platforms to help individuals from anywhere in the world integrate their access to banks to make essential purchases with ease.

In the Asia-Pacific region alone, Mastercard Pay Local has the power to facilitate payments for consumers at over 35 million merchants while opening the door to the prospect of making purchases at micro, small, and medium enterprises (MSMEs) that don’t accept traditional card payments.

It’s this level of accessibility that can help more consumers and businesses operate in areas where financial inclusivity is posing a challenge.

Powering Up Open Banking Frameworks

Digital wallets are already a key component of open banking, which will continue to grow in adoption over the coming years. Although open banking tools have been slower in their uptake in comparison to digital wallets, Kristaps Zips, UK CEO of Payabl, believes that the emergence of Variable Recurring Payments (VRPs) will be a breakthrough use case that drives more sustained levels of adoption.

Given that VRPs have the potential to seamlessly integrate subscriptions, buy-now-pay-later (BNPL), borrowing tools, and other decentralized finance (DeFi) services into transactions for customers, it may serve as a key development in showcasing the convenience of open banking.

At its core, digital wallets can help to provide more reliable access to open banking tools for users around the world, and its ability to offer greater control over spending and powerful insights driven by AI and machine learning will pave the way for far greater financial literacy in the future.

However, while the technology is rapidly growing, trust issues and privacy concerns threaten to slow its adoption rates. This may mean that the emergence of open banking will be down to the pursuit of greater regulatory confidence, rather than the power of the digital wallets that can improve accessibility.

Charting a Collaborative Future

As digital wallets evolve to become the world’s favorite means of making payments both online and offline, it’s clear that a collaborative future is required to help the technology overcome the regulatory hurdles that could stunt its growing use cases.

Collaboration between governments, financial institutions, tech leaders, and standards organizations will be required to develop a unified approach based on conducive guidelines and standards.

With the goal of financial inclusivity on a global scale, the rewards are too high to ignore for the financial sector. The coming years will see open banking improve the lives of countless users, and digital wallets will be the cornerstone on which the revolutionary technology will be built.