Digital wallets have become increasingly popular over the past few years. More people are opting to store their payment and personal information in a digital format. The global digital wallet market was estimated to be worth 3.5 billion in 2019 and is projected to grow to almost 7.6 billion by 2027, according to Fortune Business Insights.

We asked Folio to take over our blog to explain the pros and cons of using digital wallets following their recent survey which identified people’s concerns when it comes to digital wallets.

The rise in digital wallets

What’s fueling the growth of digital wallets? One significant factor was the COVID-19 pandemic and the shift in consumer shopping habits. With more people using their smartphones to make payments, digital wallets emerged as a convenient way to complete transactions in a fast and easy manner.

But digital wallets are more than just for making payments. There are additional wallets you can add to your phone that takes care of everything else. For instance, a lot of digital wallets let users manage and store physical documents, tickets, and loyalty cards. Some provide expiry dates for gift cards, passports and driving licenses so users can go about their daily lives efficiently. Some also provide functions like budgeting tools and financial management, assisting users in keeping tabs on their spending, and managing their finances more effectively.

Fears around big tech

Yet, there are still some barriers that digital wallets need to overcome. According to a 2023 survey by Folio, 59% of consumers are concerned with the security of their personal information being stored in digital wallets. With 13% of users also stating that they actively avoid large technology corporations such as Apple and Google with their information as a result. To address these concerns, digital wallet providers have invested in strong security measures, including end-to-end encryption and biometric authentication.

Benefits of digital wallets

Usability: The leading benefit is usability, according to Folio's 2023 survey, 78% of people reported using their digital wallet as a tool to enhance their organisation and productivity. Additionally, 61% of respondents stated that they use their digital wallet to backup other important cards and documents, as a replacement for their cluttered physical wallet. The number one card type stored in Folio digital wallet is bank cards.

Security: Folio's survey indicated that 59% of users consider safety and security to be one of their top three priorities when selecting a digital wallet. To ensure the security of your digital wallet, it’s advisable to choose a provider that employs robust encryption techniques and offers two-factor authentication.

Compatibility: Results from the Folio survey revealed, it’s common for users to maintain a secondary wallet specifically for storing essential items for home management. Different generations have been using their digital wallets in various ways.

• Students store their student ID, financial statements, and academic certificates
• Millennials and Generation X, on the other hand, are inclined to organise and store documents related to insurance renewals, proof of address, and documents related to their loved ones including wills and birth certificates
• Aged 65+ and above tend to back up their health cards as a priority

Convenience: It’s best to choose a digital wallet that’s user-friendly and easy to navigate. The last thing you want is a complicated wallet that makes it difficult to access your information when you need it. Many benefits to look out for include availability offline, secure data capture and fast accessibility, wherever you need it.

Say goodbye to wallet clutter and hello to convenience in just a few taps. Just imagine the day when checking in for a family holiday takes seconds not hours. Never forget your reward and discounts when you shop – so you can claim that free coffee. Effortlessly share your driver's license details for car rentals and add your receipt to claim your tax-free shopping when you travel. The possibilities are endless for streamlining your daily routine.

Thanks to Folio for taking the time to explain how digital wallets can be beneficial. If you’re interested in a digital wallet like Folio, head to the App Store or Google Play Store.

If you’d like to learn more about digital wallets, head to Be Clever With Your Cash’s Cash Chats podcast. In episode 277 personal finance blogger and journalist Andy Webb gives an honest opinion of his experience with digital wallets.