42% of users prefer digital wallets for cross-border transfers: study

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A new report has highlighted the steady rise of digital wallet adoption for cross-border transactions, underscoring a growing shift in international payments.

According to the report, digital wallets are seeing significant action in cross-border transactions, spiking by double-digit percentages over the last year. The study, a project of PYMNTS Intelligence and TerraPay, surveyed 2,600 individuals across the United Kingdom, the United States, Saudi Arabia, and Singapore.

Most surveyed respondents indicate a keen preference for digital wallets over other payment alternatives for international transactions. A staggering 42% of respondents say digital wallets are the go-to choice when sending and receiving cross-border payments.

Several reasons account for the rise of digital wallet applications in cross-border transactions. Meanwhile, 92% say the perceived transaction speed associated with digital wallets is the main allure for their use in international remittances.

Furthermore, many respondents cited growing trust levels for digital wallets over the last five years. Rising wallet interoperability across regions contributes to the rising trust levels for digital wallets.

Despite the growing pace of digital wallet adoption across several regions, there is a hesitancy in using them for large-volume transactions. Nearly half of the respondents prefer digital wallets for sending “lower-stakes international transfers.”

While the present metrics are mainly positive, the report projects even more impressive predictions for improved adoption. It forecasts a growth spurt in digital wallet adoption, rising with global financial literacy rates. 

The U.S. leads digital wallet usage for cross-border payments, but it has to stave off competition from traditional bank accounts, credit cards, and money transfer services. The U.K. and Saudi Arabia take second and third place, while Singapore occupies fourth place in digital asset adoption for international remittances.

Digital wallets are recording sky-high utility 

Apart from cross-border use cases, digital wallets stamp their claim on the domestic front. Integrating digital assets and other novel functionalities is pushing the frontiers for domestic payments across several jurisdictions.

Aware of the potential of digital wallets, Taiwan is launching its way to a national digital wallet before the end of 2025. In 2024, Thailand leaned on a digital wallet to distribute funds for citizens in a $14 billion digital money handout.

Report: Consumer habits will drive seismic changes in digital payments

Almost all respondents say digital payment volume will balloon by the end of 2025, with transaction value recording a growth spurt. Only a fraction of respondents are conservative with their projections, but a common denominator is the increase in investment across the board.

Banking executives confirm plans to increase the size of their investments in emerging technology to keep up with the changing landscape. Artificial intelligence (AI) is garnering the most attention from financial institutions.

Apart from AI, firms are experimenting with blockchain for faster settlement times and regulatory compliance processes. 

The report notes that changing consumer habits drive the pace of innovation in the payments ecosystem. For one, consumers are increasingly adopting digital wallets and leaning on biometric authentication, encouraging fintechs to invest in these verticals.

Furthermore, the need to provide tighter security standards for individuals is a driving force for payment service providers. AI-based offerings to identify financial anomalies are increasingly deployed across the board, while smart contracts provide additional protection.

The need to provide faster settlement times drives investment by ecosystem players while achieving regulatory compliance plays its role.

Outside of AI and blockchain, there is a growing interest in the Internet of Things (IoT) and wearable payments, a trend driven by small-cap payment companies.

Mainstream banks are embracing emerging technologies

Traditional financial institutions are hurtling toward emerging technologies, leaning on blockchain to revolutionize their offerings. Banks are turning to blockchain for digital bonds in droves, while others are pursuing digital asset custody licenses to broaden their horizons.

With AI, large banks are automating mundane tasks while leaning on the technology for personalization services for 
consumers. Central banks are not left out, with the Reserve Bank of India launching an AI-based model to tackle digital 
fraud.

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