Digital Wallets - Market Opportunity
Digital Wallets - Market Opportunity
Digital Wallets Are Upending Traditional Banking
Today, digital wallets like Venmo, Cash App, and others are penetrating traditional financial services, including brokerage and lending, thanks to superior user experiences and much lower costs of customer acquisition. Digital wallets could scale at an annual rate of 69% in the US to $5.7 trillion, and 78% globally to $20 trillion during the next five years..
Digital Wallets Are The Number One Payment Method Offline And Online
Dominating e-commerce payments since 2017, digital wallets surpassed cash last year in point-of-sales (POS) payments, likely in response to the COVID-19 pandemic.
The Number Of Digital Wallet Users Has Surpassed The Number Of Deposit Account Holders At JP Morgan
Based on publicly available data, Square’s Cash App and PayPal’s Venmo have amassed 74 million and 82 million annual active users in the past 8 and 11 years, respectively while J.P. Morgan hit 60 million deposit account holders after five acquisitions in more than 30 years!
Differentiated Customer Acquisition Strategies Result In Lower Customer Acquisition Costs
On a net basis, traditional banks in the US spend roughly $750 in paid marketing and roughly $2500 in total, including the occupancy expenses for branch networks, to acquire a new customer.
Based on network effects, viral marketing, and arguably superior value propositions, digital wallet providers spend as little as $1 to acquire new customers, giving them room to invest and move up-market.
Each Digital Wallet User In The US Could Be Worth $22,500 At Maturity
If digital wallets were to become consumer financial dashboards, the net present value of their financial service revenues would be roughly $10,000 per average US user. Beyond financial services, digital wallets could become lead-generation platforms for offline and online commerce, potentially adding more than $12,000 to their net present value per user.
Digital wallets also could serve as on-ramps to Web3 assets, such as NFTs. ARK estimates that such Web3 monetization could add $1,700 to their net present value per user.
The US Digital Wallet Opportunity Could Scale at an Annual Rate of 69% to More than $5.7 Trillion.
The Global Digital Wallet Opportunity Could Scale at an Annual Rate of 78% to More than $20 Trillion