Germany's digital wallet market tipped to reach $59B by 2030
Germany's prepaid card and digital wallet market is expected to record a meteoric growth spurt before the end of the decade, driven by a combination of factors.
According to a Research and Markets report, the industry will reach a valuation of $59.97 billion in 2029. The climb to a market capitalization of nearly $60 billion translates to a compound annual growth rate (CAGR) of 9.6%
The German market for prepaid cards will soar by 11.1% to reach $41.53 billion by the end of the year.
A community reading of the report highlights changing consumer behavior, an evolving digital payments sector, and corporate adoption of prepaid cards. The report notes that since COVID-19, German residents opted for contactless payment options, triggering a decline in cash transactions.
Furthermore, innovation in digital wallets offering broad functionalities for consumers is tipped to contribute to the surge in CAGR. Analysts are predicting a spike in prepaid card and digital wallet use across retail, hospitality, and e-commerce verticals in Germany.
A key driver of the growth will be the youth-focused payment solutions by German financial institutions. Meanwhile, institutions are leaning on prepaid cards for employee rewards and customer incentives.
The combination of youth-focused payment solutions and corporate adoption will support the push for a 9% CAGR by 2029. For the prepaid card segment, Best Buy, Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) are tipped to hold the majority of the segment, but the possibility of innovative entrants to the space remains.
The report notes that the climb to a $59 billion valuation will be fraught with challenges, urging firms to invest in data privacy and security features.
'Companies that innovate, enhance security, and provide user-friendly prepaid solutions will be best positioned to capitalize on opportunities in Germany's evolving financial system,' read the report
Blockchain-based payments falter in Germany
Despite the surge in digital payments, German firms are recording slow growth with blockchain technology. A new report revealed that only 21% of financial services firms are keen on exploring blockchain-based solutions, while other sectors are posting even underwhelming figures. However, many German commercial banks are exploring digital bonds to improve their current offerings. While blockchain-based solutions falter, German fintech firms embrace artificial intelligence (AI) for its productivity and efficiency perks.
Saudi Arabia to record high growth in prepaid card market
Another report by Research and Markets has tipped Saudi Arabia's prepaid card market to clinch a $12.88 billion market capitalization in 2029, projecting a CAGR of 7.5% over four years.
Currently, Saudi Arabia's prepaid card market is valued at less than $10 billion, with the report highlighting a raft of factors behind the projected growth spurt.
For Saudi Arabia, government policies to stifle cash usage are the main driving factors behind the rise of prepaid card adoption. Saudi authorities have unveiled their Vision 2030 initiative, designed to improve financial inclusion in the Gulf nation, pledging to support digital payments.
'As Saudi Arabia progresses toward a cashless economy under Vision 2030, the prepaid card market is expected to play a crucial role in shaping the country's digital payments ecosystem,' read the report.
Alongside the government's initiative is the surge in fintech firms and traditional financial institutions rolling out digital payment solutions. Over the last four years, established financial institutions and emerging firms have unveiled new digital solutions, with the report tipping the trend to continue till the end of the decade.
Furthermore, integrating prepaid cards with digital wallets and other contactless payment systems is expected to trigger adoption. New solutions merging digital assets and prepaid cards are also tipped to contribute to the projected valuation.
E-commerce utilities across Saudi Arabia will play a role in rising prepaid card usage. The report cites the fluidity of purchases and the additional security perks offered by prepaid cards in retail use.
Corporate entities are also a significant force driving prepaid card use, leaning on the solution for customer rewards and employee incentives. Established banks like the Saudi National Bank, Alinma Bank, and Rita's Bank will hold a large market share by the end of the decade.
Steep fees plague Saudi Arabia's digital payment adoption
Saudi's road toward a $12 billion market capitalization for the prepaid market is not all smooth sailing. High fees threaten to derail the country's adoption plans for digital payment, with digital wallets being the hardest hit.
To sidestep the steep fees, Saudi Arabia is exploring using blockchain and central bank digital currencies (CBDC) for payment. Despite the mounting challenges, the Gulf nation is making significant strides in cross-border payments for its burgeoning remittance industry.
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