Digital wallets 'will account for £11bn' of online spend by 2026

Digital wallets will make up £11 billion worth of online spending by 2026, as new payment methods see surge in popularity post-pandemic, according to new research.

The report from payment provider emerchantpay, which surveyed more than 2,000 UK consumers about their shopping and payment habits earlier this year, also found that 10 per cent of respondents believe that digital wallets will be their go-to method of online payment in five years’ time.

This number increases by five per cent in the Gen Z category and by one percent in the Millennials category.

Crypto has seen an increase in popularity, with four per cent of all age groups expecting to use it as a preferred payment method in five years’ time compared to one per cent today. The research suggest that this could equate to as many as 2.68 million people nationally, or £4.4billion in online payments being made in cryptocurrency in the UK annually, by 2026.

By comparison, the top three most popular payment methods today - PayPal, debit cards and credit cards - are all set to decrease in popularity with debit cards dropping the most, from 33 per cent today, to 28 per cent in five years’ time, according to the report.

Buy Now Pay Later (BNPL) was another popular payment method, with 37 per cent saying the service encouraged them to buy. 38 per cent were neither encouraged or discouraged, and 19 per cent were discouraged to buy.

“These findings paint a clear picture of a future generation of consumers, much more acquainted with new payment methods than their parents and grandparents,” said Angus Burrell, senior vice president retail, emerchantpay. “Today’s commerce environment is evolving faster than ever and businesses must keep up.”

Burrell added: “With so much competition online and, as we’ve seen from previous report chapters, speed and efficiency playing such an important role in encouraging people to buy, the payment methods that merchants offer can mean the difference between sale or fail.”

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