The digital wallet industry has transformed into a dynamic and complex landscape over the past years, evolving from simple payment tools into sophisticated, multifunctional digital platforms that are playing an essential role in the broader financial landscape.

These digital wallets now offer a wide array of services beyond basic payments, incorporating features such as account management, financial insights, and access to a variety of financial products, but also lifestyle services like travel, restaurants and events.

A new report produced by ti&m, a Swiss IT consulting company, in partnership with the Institute of Financial Services Zug (IFZ), the Swiss Bankers Association and Swiss Stablecoin, looks at this evolution, exploring the evolving landscape of digital wallets and providing insights into the latest trends and key regulatory developments influencing the future of digital payments and finance.

Digital wallets emerge into financial platforms

According to the report, digital wallets have expanded their functionality significantly, evolving into broad financial platforms. This evolution has in part been fueled by open banking regulations.

Rules such as the second Payment Services Directive (PSD2) in the European Union (EU), the UK’s Open Banking Standard, and the Open API Framework in Hong Kong, allow for secure, consent-based access to users’ financial data through standardized application programming interfaces (APIs).

This allows digital wallets to offer enhanced functionality, such as unified account management, personalized financial insights, and seamless payments directly from bank accounts, bypassing traditional card networks.

Moreover, the interoperability provided by open banking enables digital wallets to integrate services like tailored credit options, loans, buy now, pay later (BNPL) schemes, investment opportunities, and insurance products.

Revolut illustrates this trend. The company, which operates globally, has evolved into an expansive financial ecosystem that includes products such as currency exchange, debit and credit cards, virtual cards, Apple Pay, interest-bearing “vaults”, personal loans and BNPL, and stock trading.

Users can link their accounts from various banks, facilitated through APIs, and the wallet supports a wide range of assets, including fiat money, crypto assets, stocks, commodities, airline miles, and Revolut’s own points program “RevPoints”.

Revolut is regulated by several authorities globally and has a legal representation in Switzerland. It maintains partnerships with banks and third-party providers to extend its services beyond its internal ecosystem.

Revolut serves over 45 million retail and 500,000 business customers globally, operates in more than 140 regions and supports over 25 currencies. Recently, the company reached a US$45 billion valuation after a secondary share sale, making it worth more than some of Europe’s biggest banks, Reuters reported. In July, it was granted a UK banking license after a three-year wait, though with some restrictions.

The rise of digital payments

Digital payments have risen in popularity over the past couple of years, accelerated by the COVID-19 pandemic. This has boosted the adoption of digital wallets globally and reduced the use of cash.

In 2023, digital wallets accounted for 30% of global point-of-sale (POS) transaction value, totaling over US$10.8 trillion, and 50% of global e-commerce transaction value, according to the 2024 Global Payments Report by payment processing company Worldpay.

Digital wallets are projected to be the fastest-growing payment method through 2027, expected to grow at an annual rate of 15% for e-commerce and 16% for POS transactions.

In parallel, the use of cash is declining globally, down 8% for POS transactions in 2023. Cash, however, remains a vital payments tool for billions of consumers, accounting for 16% of global transaction value in 2023, or US$6 trillion.

In Switzerland, Twint is the leading mobile payment platform. The platform operates more as an independent mobile-oriented payment system than as a digital wallet, allowing users to link the app to their bank account with the issuer. This classifies Twint as a debit payment instrument rather than a digital wallet for payments in the stricter sense.

Using Twint’s digital wallet, users can conduct payment transactions through the direct integration of a partner bank account via a prepaid account top-up for each transaction executed by the app, offering flexible options for managing their finances.

Beyond transactions, Twint also supports services like digital parking payments, digital vouchers, special deals and discount promotions, as well as insurance coverage.

In 2023, Twint had over five million active users, processed 590 million transactions, and was accepted as a payment method by 77% of bricks and mortar shops and 76% of online shops in Switzerland.

A 2023-2024 study conducted by Statista polled more than 400 consumers in Switzerland, and found that 73% of respondents had used Twint over the prior 12 months at a physical store, making it the top mobile payment solution, ahead of Apple Pay (40%) and PayPal (35%).

Google Pay is another popular digital wallet in Switzerland. The platform, which is managed by Google, allows users to register credit and debit payment instruments in the wallet, enabling them to make everyday payments. The wallet also includes features such as loyalty points and gift cards.

Like other digital wallets, Google Pay partners with banks, financial institutions and other contracting parties to enhance its services.

Despite the rise of digital wallets, cash remains a major part of the Swiss payment ecosystem. A 2023 survey by the Swiss National Bank (SNB) revealed that 92% of customer-facing businesses in the country accept cash, compared to 59% that accept app-based payments.

Featured image credit: edited from freepik