How rise of digital wallets is transforming FinTech industry?
The digital wallet is a state-of-the-art invention and is also known as "e-wallet". It is a financial system that works through software. With the help of this, the user can make all kinds of transactions through his mobile phone or computer through internet. Banks have created such a financial system, but private companies also own them. They create digital wallets to facilitate transactions for customers. Over the past few years, several digital wallet companies have sprung up, including PayPal, Apple Pay, Coinbase, Alipay, Venmo and WeChat are notable.
The advantage of a digital wallet is that you can transact at home and do not have to go to the bank. This saves time and energy. It is also a fast way to send or receive money and pay bills. That's why millions of people around the world leave their bank accounts and get digital wallets.
This trend has originated not only in Western countries but also in Asia. The Chinese are still committed to the new financial system. In 2015, Chinese citizens transacted two trillion dollars through digital wallets. Last year, this transaction reached 36 trillion dollars worth.
That number is three times China's GDP. Similarly, the digital wallet in the United States has brought about a financial revolution. The situation there now is that Americans have more digital wallets than bank accounts. At present, Square and PayPal are digital wallets. The number of customers of the companies has crossed 60 million. They got this customer in just seven years. While it took 30 years for the American bank, JP Morgan to get 60 million customers.
According to a recent Square report, the Corona virus epidemic has led to a dramatic increase in digital adoption from 8% on March 1st to 31% on April 23.
Prior to the epidemic, adoption rates in the United States were much slower than in other countries due to security concerns.
Experts say that in the future, most consumers will be transacting with digital wallets. The reason is that these transactions are faster and cheaper. Surprisingly, the companies that provide digital wallets also have lower costs than banks. According to research, every bank in the United States spends a thousand dollars to create a new customer, while the same cost of a digital wallet company is only twenty dollars. This difference in costs is also hurting banks. Their costs are increasing while income has decreased.
In the United States and other Western countries, there is a danger that many small banks will close in the coming years. Companies with digital wallets are now offering reasonable profits to consumers. Currently, 230 million Americans have acquired a digital wallet. Experts say that if each digital wallet account was worth 20,000 dollars in 2025, the value of this financial system in the United States alone could reach 4.6 trillion dollars.
Thank you for reading! Stay Safe!👋😌
Posted Using LeoFinance Beta