In 2021, e-commerce witnessed a global growth of 14 per cent year-on-year following the gradual economic recovery from the pandemic, exceeding USD5.3 trillion in transaction value.
By 2025, e-commerce is expected to account for 12 per cent of global consumer spend, of which 59 per cent is transacted via mobile devices, according to the seventh edition of The Global Payments Report.
Released by Fidelity National Information Services (FIS), the report offers a snapshot of the current payments landscape: globally, by region, and in 41 select markets.
It also tracks consumer payments when shopping online and at the point of sale, identifies key payment trends, and projects scenarios through 2025 for payment method shares as well as market size to navigate global and local trends in payments.
GLOBAL E-COMMERCE PAYMENT METHODS
As the leading payment method, digital wallets accounted for 48.6 per cent of e-commerce transaction value globally in 2021, followed by credit card/charge card (21 per cent) and debit card (13.2 per cent).
By 2025, digital wallets are projected to rise to 52.5 per cent of transaction value. The Asia-Pacific region continues to set the pace in digital wallet with the overwhelming prevalence of Alipay and WeChat Pay. From 2021 to 2025, digital wallet’s share of Asia-Pacific is projected to increase from 68.5 per cent to 72.4 per cent (over USD3.1 trillion).
Credit’s share of global e-commerce spend is projected to drop slightly to 18.8 per cent in 2025. However, the absolute value is projected to rise to over USD1.56 trillion. Debit cards are also projected to decline, though to a less significant extent from 13.2 per cent in 2021 to 12.9 per cent in 2025 as absolute value rises to over USD1.07 trillion.
Bank transfers accounted for a small portion of global e-commerce transaction in 2021, clocking in at 7.4 per cent. This figure is projected to drop to 6.2 per cent by 2025, while absolute growth will exceed USD516 billion.
Buy now pay later (BNPL) is gaining traction globally, accounting for 2.9 per cent of global e-com transaction value in 2021 and projected to increase to 5.3 per cent share by 2025.
Klarna, Afterpay (acquired by Square) and PayPal are the leading companies in this field while Zip, Sezzle and small local competitors emerge to compete for this fast-growing payment segment.
GLOBAL POS PAYMENT METHODS
Mobile wallet usage is becoming increasingly common across markets and is expected to grow further as contactless point of sale (POS) terminal penetration increases.
In 2021, mobile wallets accounted for 28.6 per cent of global POS transaction value, followed by credit card/charge card (23.9 per cent) and debit card (22.7 per cent). The Asia-pacific region leads the way in mobile wallet adoption, with 44.1 per cent of 2021 POS transaction value. Mobile wallets are expected to outpace all other POS payment methods combined in the region by 2023. Globally mobile wallets are expected to rise to 38.6 per cent share by 2025 while most of the other POS payment methods are expected to decrease.
In 2021, credit card use dropped and debit share increased. However, card usage is increasingly shifting towards pass-through mobile wallets. Credit card usage is projected to decrease to 22.4 per cent by 2025 when it will represent over USD13.2 trillion, up from USD11.1 trillion in 2021.
Debit cards increased spend share in 2021 to 22.7 per cent globally, led by a 39.7 per cent share in Europe. Debit cards are projected to fall slightly to 22.3 per cent in 2025.
Cash usage dropped sharply in 2020 as businesses closed down due to the pandemic, and the downward trend continued until the following year though it was relatively minor.
Markets such as Spain, Colombia and India recorded an increase in cash usage but remained well below pre-COVID levels.
In 2021, cash accounted for 17.9 per cent of transaction value. As the global economy moves rapidly towards digitalisation, cash usage is projected to drop to 9.8 per cent share in 2025.
Cash usage is projected to be lowest in North America (5.6 per cent) and Asia-Pacific (7.7 per cent), and highest in Middle East and Africa (31.3 per cent) and Latin America (23.6 per cent).
Local retailer and bank financing accounted for 3.9 per cent of global POS transaction value in 2021, whereas BNPL accounted for less than one per cent. The former is projected to decline to 3.4 per cent share by 2025, while BNPL is projected to gain traction and increase to 1.6 per cent.
European consumers have gravitated to BNPL solutions at the POS most, with its share projected to increase from 1.9 per cent to 2.8 per cent by 2025.