COSTA MESA, Calif.–Digital wallets are now the fastest-growing payment method in the United States, with almost half (48%) of U.S. consumers indicating that they have used a digital wallet in the past 90 days, up 12 percentage points from 2023, according to J.D. Power data.
What’s driving this surge in adoption? According to the company’s new 2024 Digital Wallet Satisfaction Study, satisfaction increases with frequency of use.
“Remember when cash was king? Now, convenience is the top driver of payment method choice and that’s causing consumers to increasingly turn to digital wallets for all types of transactions,” JD. Power said in releasing its findings. “Overall customer satisfaction with digital wallets is up four points (from 660 to 664, on a 1,000-point scale)…and the top factor driving that increase is ease of use, both online and in-person.”
The Findings
As a result, J.D. Power said consumers are using digital wallets more frequently than ever.
Among the findings:
- Overall, 48% of consumers have used a digital wallet in the past 90 days. Among those, 40% have used PayPal; 28% have used Apple Pay; 22% have used Venmo; and 19% have used Cash App Pay.
- Among more frequent users who access their digital wallets at least once a month, Venmo and Cash App Pay are seeing the highest overall customer volume.
- Within the subset of digital wallet power users, who are using these services at least five times per month, Apple Pay is the most frequently used service.
A Market Ripe for Competition
J.D. Power said that while digital wallet usage rates and satisfaction scores are both “going in the right direction,” the industry is far from mature and gaps exist for new entrants.
“Chief among these gaps is inconsistent merchant acceptance. As we saw in theJ.D. Power 2024 Merchant Services Satisfaction Study, only 57% of small businesses now accept digital wallets (94% accept cards) and some large merchants are still not wallet enabled in-store,” J.D. Power said. “Some wallets can only be used for online purchases while others can only be used in-store. And, no wallets are universally available at accepting merchants the same way that cards are.”
‘Also a Problem’
J.D. Power said the lack of perks associated with digital wallet providers, such as rewards programs or merchant discounts, is also a problem.
“Among the most important drivers of customer satisfaction with digital wallet providers, such as ease of use and security of account information, scores are lowest for perks,” J.D. Power said. “These gaps mean that customer loyalty is hard to secure in this space, with just 34% of customers indicating that they ‘definitely will not’ switch brands.”
Watch This Space
In the near-term, J.D. Power said it expects digital wallet usage to continue to grow rapidly, outpacing other methods of payment at the point of sale, by virtue of its ease of use and its privileged position in the center of consumer lives in smartphones and online.
“It is noteworthy, for example, that the percentage of people who say they prefer to use digital wallets for online and mobile purchases rises five percentage points and six percentage points (from 12% to 17% and 22% to 28%, respectively) in 2024,” J.D. Power said. “As online and mobile continue to be the channels of choice for so many consumer transactions, digital wallets are certain to benefit from that volume.”
The Forecast
J.D. Power further forecast that merchant acceptance will continue to grow.
“Seventy-nine percent of small businesses have a favorable impression of digital wallets, calling out fast transaction speed and customer demand as the primary attributes of the payment method, and traditional large merchant holdouts continue to convert as demand increases,” J.D. Power said.
For additional info: J.D. Power 2024 Digital Wallet Satisfaction Study,
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FAQs
Digital wallets are now the fastest-growing payment method in the United States, with almost half (48%) of U.S. consumers indicating that they have used a digital wallet in the past 90 days, up 12 percentage points from 2023, according to J.D. Power data.
Why are digital wallets growing? ›
Digital wallets have grown in popularity as consumers have become accustomed to the convenience and flexibility of contactless payments. Forbes recently reported that 53% of consumers now use digital wallets more often than traditional payment methods.
Why are digital wallet in much demand today? ›
Most mobile applications have introduced digital payments, making digital wallets the most preferred online payment mode. During the time of demonetisation in India, digital payments increased. Since then, many platforms have chosen digital wallets as the most convenient payment option.
What percentage of Americans use digital wallets? ›
Highlights. In 2022, there were 3.4 billion digital wallet* users in the world. 65% of U.S. adults said they used a digital wallet at least once in the past month.
Do digital wallets as a payment method influence consumer in their buying behavior? ›
Additionally, digital wallets lead to impulsive buying decisions, and consumer trust in electronic transactions is higher than that of financial institutions.
What is one of the main disadvantages of using a digital wallet? ›
When using a digital wallet for payments, transaction data may be tracked, leading to privacy concerns about the security of personal information stored digitally. The idea that third parties could track and analyze your financial behavior is a significant privacy concern for many users.
Why digital wallet is better than credit card? ›
Contactless forms of payment such as digital wallets are always more secure than swiping a card, he added, noting that scammers are still known to put card skimmers on credit card readers to steal the customer's information. If you use a digital wallet, “you are always going to be in control,” McKnight said.
Why is an e-wallet better than cash? ›
Digital transactions are generally safer and can be tracked more reliably, which reduces potential instances of fraud. Plus, all e-wallets require some form of verification before payment, which means even if someone steals your phone, they can't steal the money in your e-wallet.
What is the most popular e-wallet in the US? ›
For consumers using digital wallet apps, 69% of respondents stated they used PayPal the most, making it the most popular option. According to our study, the next most popular mobile wallet payment options are Google Pay (56%), Apple Pay (53%) and Samsung Pay (52%).
Do digital wallets make money? ›
A digital wallet makes money from transaction fees: deposit, withdrawal, or transfer fees. For example, for each recharge made through the digital wallet, the company receives a commission of about 2 to 3%.
Nearly 80% of Gen Z consumers use digital wallets, according to the study. By contrast, that figure was 66% for millennials, 43.7% for Gen Xers, and 25.7% for baby boomers.
Why do people prefer e wallets? ›
What are the advantages of e-wallets? E-wallets offer convenience, security, and speed. They eliminate the need to carry physical cash or cards, provide secure transactions with encryption, and enable quick payments both online and in-store.
Which digital wallet is most widely accepted? ›
PayPal owns it and is becoming the most popular digital wallet in the US market due to its fast & secure transaction process.
What are the threats to digital wallets? ›
Data breaches and hacking attempts remain a severe concern for digital wallet users. Despite robust security measures like encryption and tokenization, no system is immune to cyberthreats. Hackers continually develop sophisticated methods to infiltrate networks and access sensitive data.
What are the factors influencing e wallets? ›
Perceived simplicity, perceived usefulness, per- ceived security, social impact, attitude, and enabling conditions are all put to the test. Intentions to use an electronic wallet are heavily influenced by five factors: simplicity of use, security, usefulness, social impact, and enabling conditions.
What is one of the main advantages of a digital wallet? ›
One of the biggest advantages of digital wallets is that they let you pay for things without credit or debit cards, once you enter and store your card and banking information in the mobile payment platform.
Why do people prefer digital wallets? ›
Digital wallets offer the ultimate convenience, allowing customers to make purchases with just a few taps on their mobile devices. This ease of use can significantly enhance the shopping experience, leading to higher customer satisfaction and increased conversion rates.
Why are there so many eWallets? ›
Mobile wallets are gaining popularity for a number of reasons-they give users greater flexibility and convenience, offer better security, and are easy to use. As more locations and websites accept mobile wallets we'll only see the continued popularity and use of digital wallets.
What is the rise of digital wallets and their financial implications? ›
Social distancing measures and lockdowns prompted a surge in online shopping, contactless payments, and remote financial management, resulting in significant growth for digital wallets. Statistics: According to a study by Statista, global mobile wallet transactions are expected to reach $1.8 trillion by 2025.
Who is the target audience for digital wallets? ›
79% of Gen Z consumers are avid users of digital wallets. Digital Wallets for Millennials: Millennials are also major adopters of digital wallets, with 67% actively using them.
