Competition intensifies for supremacy in the digital wallet sphere:
In the ever-evolving landscape of digital payments, a fierce competition known as the 'War of Wallets' is being waged. This battle sees various providers vying to establish their own digital payment wallets for use at the point of service (POS).
The current battlefield is marked by a clash between Super Apps, like WeChat, Paytm, and Grab, and specialized fintechs. Super Apps aim to create comprehensive digital ecosystems, combining payments, messaging, rides, food delivery, investments, and unified identity solutions, to maximize user retention and lifetime value. In contrast, specialized fintechs compete by delivering best-in-class, focused functionalities with agile innovation and open APIs.
Providers such as Volksbanken, PayPal, and Wero find themselves at the heart of this struggle, grappling with both challenges and opportunities presented by regulatory and technological changes.
One such change is the opening of NFC interfaces on iPhone and Android devices. This development allows third-party wallet and payment app providers direct access to use device NFC for contactless payments, without relying on the device manufacturer's wallet app. This shift levels the playing field, enabling providers like Volksbanken, PayPal, and newer players like Wero to compete more effectively for tap-to-pay experiences.
Another significant change is the EU's Digital Markets Act (DMA). Designed to reduce gatekeeper control by big platform owners, the DMA mandates interoperability and open access, thereby supporting wallets and fintechs outside the dominant OS-owned wallets. This regulation is expected to benefit traditional banks like Volksbanken and fintechs like PayPal and Wero.
In this dynamic environment, providers like Volksbanken, PayPal, and Wero have a potential competitive edge. The combined effect of regulation (DMA) and new device-level access (NFC opening) enables them to innovate, integrate, and compete in the 'War of Wallets' beyond the closed ecosystems of device manufacturers.
The future of digital payments appears to be a mix of ecosystem consolidation via Super Apps and niche excellence from specialized fintechs, with regulatory and technical shifts amplifying options for alternative wallet providers.
One notable European player making strides is Vipps from Norway, which has been the first to use this new feature, with German VR banks, PayPal, and other providers planning to follow suit. The race for digital payment wallets is still wide open, with the winner likely to be determined by factors such as user experience, trust, reach, integration, and disruption caused to the trade.
As the competition heats up, experts like Miriam Wohlfarth, founder of PAB, Ratepay, and Banxware, believe that the growing awareness of digital European sovereignty will present an opportunity for European providers, particularly banks, to establish their own wallet solutions. The solution that proves to be simple and convenient will likely emerge victorious in the 'War of Wallets'.
Sources: 1. TechCrunch 2. Bild 3. Handelsblatt 4. Financial Times
Mobile payments are now at the heart of the battle for dominance in the digital finance and business sector, with providers like Volksbanken, PayPal, and Wero keenly observing shifts brought about by regulatory changes and technology advancements. The opening of NFC interfaces on iPhone and Android devices and the EU's Digital Markets Act (DMA) have both leveled the playing field, providing these providers with opportunities to innovate and compete more effectively in the 'War of Wallets'.
Considering the growing emphasis on digital European sovereignty, European players such as Vipps from Norway, German VR banks, PayPal, and other providers could potentially take advantage of this trend, as noted by experts like Miriam Wohlfarth. The future of this competition may depend on factors including user experience, trust, reach, integration, and disruption caused to the trade.
