SINGAPORE (THE BUSINESS TIMES) - Digital wallets are poised to overtake credit cards to become the most popular online payment method in Singapore by 2024, amid the e-commerce boom fuelled by the pandemic.
Their soaring popularity in the e-commerce market came largely at the expense of credit cards, bank transfers and cash on delivery, according to the latest global payments report by Worldpay from FIS released on Wednesday (March 3).
In 2020, credit cards (45 per cent), digital wallets (20 per cent) and bank transfers (12 per cent) were the most popular online payment methods.
Among these payment options, digital wallets such as GrabPay and DBS PayLah! are expected to account for almost a third or 27 per cent of the Singapore market by 2024, in line with global trends, said the report.
Globally, digital wallets remain the payment method of choice among e-commerce consumers, accounting for 44.5 per cent of e-commerce transaction volume in 2020. Chinese consumers lead the way with digital wallets, accounting for 72.1 per cent of e-commerce purchases.
Driven by mobile commerce, Singapore's e-commerce market reached US$7 billion (S$9.3 billion) in 2020, and is projected to grow 40 per cent over the next four years to reach US$10 billion.
"Digital wallets have been on the rise for years but have accelerated amid the Covid-19 pandemic," said Mr Phil Pomford, Asia-Pacific general manager of Worldpay Merchant Solutions at FIS.
As consumers shift away from cash at point-of-sale (POS) terminals, digital wallets are also capturing greater consumer loyalty for in-store purchases. They are expected to account for 20 per cent of the POS market by 2024, according to the report.
Credit cards continue to be the preferred in-store payment method, accounting for 38 per cent of transactions in 2020, and are projected to retain this market share through to 2024. Cash use accounted for 26 per cent of in-store payments in 2020, but is projected to decrease rapidly over the next four years.
Buy now, pay later is now the fastest-growing online payment method in Singapore. It is on track to grow to 13 per cent of the online payment market in 2024, from just 3 per cent currently, said the report.