Digital wallets: growing importance in retail

by Sandra Katzenberger

The world of payments is becoming increasingly digital – and faster than ever before. Digital wallets, also known as e-wallets, are steadily establishing themselves as a convenient and versatile alternative to traditional payment methods. For both consumers and retailers, they offer one key advantage: flexibility and efficiency. A look at current developments reveals the role mobile payment methods will play in the future.

In 2023, an impressive 593 million mobile payment transactions were processed in German retail, according to the EHI Retail Institute. Apple Pay dominated with a share of 60 to 65 percent, followed by Google Pay at 25 to 30 percent. Other providers such as the Sparkasse app, Bluecode, Payback Pay, and Samsung Pay have also secured their place in the payment landscape, though with smaller shares of 5 to 15 percent. Additionally, retailer-specific wallets like Lidl Pay or Edeka’s payment options contribute to the growing popularity of mobile payments.

Despite this momentum, many consumers still rely on physical cards. Currently, 71.5 percent of all card-based transactions are contactless but still use a physical card. The mobile share is at 7.5 percent but shows a clear upward trend. Customers particularly value the ability to store multiple payment methods – credit cards, debit cards, and Girocards – in a single digital wallet.

Horst Rüter, a payment expert at EHI, sums it up: “Wallet solutions are dominated by international providers, which fundamentally makes acceptance expensive for retailers – especially when credit cards are the primary payment method. Retailers prefer a stronger focus on the Girocard in this context.”

Digital wallets have also become indispensable in e-commerce. The E-Commerce Market Germany 2024 study by EHI and ECDB reveals that 96 percent of online shops accept wallets. PayPal, offered by 19 out of 20 retailers, remains the leader. Amazon Pay, on the other hand, is available in a quarter of online shops.

Apple Pay and Google Pay, already successful in physical retail, are gaining traction online as well. According to the EHI Online Payment 2024 study, 48.3 percent of surveyed companies plan to integrate Apple Pay, while 37.9 percent are considering Google Pay. This underscores the perception of PayPal, Apple, and Google as key players in online payments – surpassing even traditional credit card providers and the German banking industry.

The numbers speak for themselves: After market leader PayPal, Apple Pay has climbed to second place among the 1,000 largest online shops, overtaking Amazon Pay in third. Over a quarter of these shops now offer Apple Pay – a rise of 11.1 percentage points compared to the previous year. Google Pay also shows growth, with a 6.3 percentage point increase bringing its acceptance rate to 14.2 percent.

Digital wallets have become a central component of payment processing, both in physical and online retail. However, user expectations are evolving: customers increasingly demand more than just payment functionality. A study by Pymnts.com examining the shopping behavior of U.S. consumers highlights significant untapped potential.

The study shows that 73 percent of current users are interested in additional features, compared to only 30 percent of non-users. Generation Z stands out in particular: 66 percent express a strong willingness to switch to providers offering innovative features beyond simple payment processing. Banks, credit card issuers, and tech companies are under pressure to enhance their offerings to retain customers. Otherwise, they risk being outpaced by digital competitors.

The advantages of expanded e-wallet functionalities are clear: greater flexibility, efficiency, and improved user-friendliness. Retailers and service providers must not only observe these trends but actively adapt to remain competitive in an increasingly digital marketplace.