Digital wallets to drive £11bn in online spending by 2026

September 8, 2021

A recent report by payment service provider Emerchantpay has discovered digital wallets will account for £11bn in online consumer spending by 2026.

The report is the fourth and final instalment of the company’s New World, One Market Report that scrutinises consumer behaviour post-pandemic.

Emerchantpay found that 29% of respondents claimed they took out more subscriptions last year compared to 2019, with an average spend totalling £25.32 per month, equating to £304 a year. This details that subscriptions could therefore be realising a total of $20.39bn per year for all UK consumers.

Of all the age groups, this trend was mostly led by Gen Z and Millennials who took out an average of 2.1 and 1.75 subscriptions last year respectively. This was compared to just 0.55 for Baby Boomers.

Meanwhile, Gen Zers spent the most of subscriptions with a monthly average of £31.46, while Millennials spent £28.52, Gen Xers spent £20.52 and Baby Boomers spending £16.22.

Survey respondents in the Greater London were found to have taken out the most subscriptions at an average of 2.06, followed by those in the West Midlands at 1.66 and then those in the South East at 1.46.

The report identified PayPal as the preferred payment method online, which was chosen by up to 34% of consumers – a figure that rose to 46% with Gen X respondents. In 2026, 15% of Gen Zers and 10% of Millennials expect digital wallets to be their go-to method for paying – making up £11bn in online spending.

Crypto saw a respectable climb in popularity in the report, with 4% of all age groups expecting to use it as a preferred payment method in five years’ from now versus 1% today. The three most popular payment methods today – PayPal, debit cards and credit cards – are expected to decrease in popularity, with debit cards falling from 33% to 28% by 2026.

The survey found an exciting market amongst most age groups was the buy now, pay later (BNPL) sector. Up to 37% said the service encouraged them to buy, while 38% said they were neither encouraged or discouraged – however, younger generations were more likely to buy through BNPL at 45% and 46% for Gen Zers and Millennials respectively.

For those who said they were likely to return to the high street to shop following the pandemic, 50% professed that BNPL would encourage them to buy. London-based respondents were most likely to be encouraged by BNPL at 45%, followed by the North West at 41%. East England residents were least likely at 28%.

Emerchantpay SVP of retail Angus Burrell said, “These findings paint a clear picture of a future generation of consumers, much more acquainted with new payment methods than their parents and grandparents. Today’s commerce environment is evolving faster than ever and businesses must keep up.

“With so much competition online and, as we’ve seen from previous report chapters, speed and efficiency playing such an important role in encouraging people to buy, the payment methods that merchants offer can mean the difference between sale or fail.”

Burrell also commented that the pandemic has enacted a ‘real shift in public attitudes’ to technology spanning all sectors – and that a number of retailers have struggled to get to grips with it.