We are Expanding Visa Direct to Digital Wallets, Here's Why

By Ruben Salazar, Global Head of Visa Direct

From an agricultural worker in Bangladesh to a young professional in London, digital wallets can help make various payments convenient for people and small businesses. Developed with a mobile-first mindset, digital wallet users are expected to exceed 5.2B globally by 2026.[1] That number will continue to grow as consumers get more comfortable storing their financial information and handling payment needs through their smartphones.[2]

Digitally native consumers -- Millennials and Gen Z -- tend to embrace wallets and are driving the shift away from traditional money movement practices offered by banks. With different spending habits, financial attitudes, and payment preferences than prior generations, they often seek new innovations that make sending and receiving money simpler and more efficient. 75% of surveyed Gen Z use P2P payment platforms every month[3] and 70% of Gen Z consumers shop online using mobile-first payments.[4] User experience can vary from wallet to wallet, but a good digital payment experience often includes tokenization, contactless payments, fast funding capabilities, and cross border payments. From messaging friends to booking travel, wallets are often a one-stop shop for goods and services.

COVID-19 has also accelerated the move to wallets, by steering people away from in-person experiences and cash usage. Whether shopping or banking, consumers now feel comfortable in foregoing their physical wallet and using a digital wallet for a variety of touchless daily transactions.

A financial tool for convenience and inclusion

The digital transformation of payments, coupled with global acceptance of mobile technology has made wallets an increasingly common part of life. People now have greater choice and flexibility in sending and receiving payments to the instrument that they are more likely to use. Consumers [surveyed] are using a variety of payment methods to fund their digital wallets, including bank accounts (35% global average), debit cards (26%) and credit cards (23%).[5]

In some markets, wallets are one of the most accessible financial tools for consumers. Around 1.8 billion people globally are still left out or poorly served by the global financial system.[6] But for the unbanked and underbanked, wallets are gaining traction as an empowering first entry point to the financial system. Because having a bank account doesn't equate to having access to the digital economy, digital wallets can create greater financial equity and enable underserved populations to access financial products that positively impact their relationship to money and wealth.

While many may rely on wallets as their only available financial tool, others may use them in addition to their bank account or card for ease of use. Case in point: when was the last time you sent someone money and asked for their bank account information? For consumers and small business owners, sending and receiving money via wallet can be simply convenient.

The P2P and cross-border payments landscape is changing

Cross-border transfers are evolving along with consumer P2P domestic payments. Rather than filling out telegraphic transfer forms at a bank branch and waiting days to confirm the money was sent, sending directly to cards or using digital wallet transfers is quick, and payments are more convenient for customers. There are continued signs that digital wallet ownership is gaining traction amongst consumers and SMBs in some of the highest populated and large inbound remittance markets, such as China, India, Mexico, Philippines, Kenya, and Bangladesh. Cross-border transfers sent and received via mobile wallets grew by 48% in 2021, reaching $16 billion.[7]

Visa Direct will link these domestic close loop ecosystems and enable them as receiving endpoints to help facilitate cross-border money movement as part of our core offering.[8]

Expanding the reach of Visa Direct

As part of our effort to transform the next generation money movement network, wallets will extend Visa Direct's reach beyond cards and bank accounts to more endpoints. By enabling Visa Direct, clients can offer cutting-edge payment options for sending money domestically or internationally, to bank accounts, cards, and now to digital wallets. From P2P to B2b, wallets offer reach and revenue opportunities to expand into new markets and deliver better payment experiences with wallet transfers that are convenient and secure. This is possible through Visa's partnership with Thunes, a global leader in cross-border payments to digital wallets and bank accounts, Visa Direct's clients will now be able to connect to an additional 1.5B wallet endpoints, across 78 wallet providers, in over 44 countries and in Asia-Pacific, CEMEA, and LAC through a single connection[9].

A son working in Canada can send money to his parents in the Philippines without waiting days for the funds to be accessible. A marketplace can settle payments with small merchants around the world; a content creator can request payments to social media platforms; a father in South Korea can send tuition funds to his son in Europe. A company can advance payroll payments to his independent contractors in Latin America.[10] The world is digital, and these developments can make money movement facilitated by Visa Direct more accessible to the underserved and unbanked populations as well as continue to enhance the user experience for millions of banking customers who use wallets as an everyday financial tool.

For more information on Visa Direct, click here.

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[1] Juniper Research, "Digital wallet users to exceed 5.2 billion globally by 2026, as digitization accelerates cashless transition", August 2, 2022.

[2] Visa Economic Empowerment Institute, "The rise of digital remittances: How innovation is improving global money movement", February 1, 2021. https://usa.visa.com/content/dam/VCOM/global/ms/documents/veei-the-rise-of-digital-remittances.pdf.

[3] PYMNTS, "Why Digital Payments Innovations Sticks to Gen Z", January 1, 2020. https://www.pymnts.com/news/payments-innovation/2020/why-digital-payments-innovation-sticks-to-gen-z/.

[4] Paysafe Group, "Lost in Transaction Gen Z expectations at the checkout", a survey of 6,197 online interviews conducted by Loudhouse, a London-based research agency, in the following countries: USA, Canada, UK, Germany, Austria, and Bulgaria. April 2019. https://www.paysafe.com/fileadmin/content/pdf/LiT_GenZ_FuturePayments_FINAL.pdf.

[5] Worldpay from FIS, "The Global Payment Report 2022, a snapshot of the current payments landscape globally, by region and in 41 select markets", September 2022. https://worldpay.globalpaymentsreport.com/en.

[6] Michael Schlein, "Three takeaways from the Findex -- and three next steps", Accion, July 7, 2022.

[7] GSMA, "State of the industry report on mobile money 2022", https://www.gsma.com/sotir/wp-content/uploads/2022/03/GSMA_State_of_the_Industry_2022_English.pdf.

[8] Actual fund availability depends on receiving financial institution and region.

[9] Wallet functionality varies by market. Please consult your Visa representative.

[10] Use cases are for illustrative purposes only. Program providers are responsible for their programs and compliance with any applicable laws and regulations.