The rise of digital wallets

E-wallets are giving banks a run for their money as Americans make their finances mobile

An estimated 106.6 million American adults are swapping traditional methods of banking and purchasing for something more tech-forward: a digital wallet.

A survey conducted by finder.com found that Americans used mobile payment services like Venmo, Facebook Messenger, Google Wallet, Apple Passbook and Chirpify in 2016 to send and receive money.

These services are shaking up the banking world by allowing transfers from one bank account to another, some without fees and as fast as in 24 hours. It’s no wonder that so many Americans are taking on the trend. In fact, 57% — or more than 60 million Americans — use a digital wallet more than any other means of transferring money, like an ATM, cash of bank check.

Single millennials are changing up how we pay our bills

No group has embraced the ease of the digital wallet quite like millennials, with 64% using at least one of these services in the past year. Charging your friend for half of a burrito is as easy as ever, and the digital paper trail ensures that you and your friends are immediately paid up.

Half of these 18- to 34-year-olds use them regularly, and other groups are catching on. Although millennials are more likely to spend more than other generations via this method, 40% of Gen Xers have used a digital wallet in the past year, with 17% of baby boomers having done so.

Considering the volume of students and millennials embracing this technology, it should come as no surprise that the biggest group of virtual wallet users are single and have never married (53%). Though this group may get hounded the most by Mom about being glued to their phones, it’s the exact reason why the digital wallet makes so much sense.

According to finder.com Money Expert Michelle Hutchison:

Traditionally, US banks have charged high fees for transferring money from your bank account to other people. But payment apps allow you to sidestep those fees by removing the bank as the middleman. For instance, major banks may charge up to $10 in next-day transfer fees, compared to digital provider Venmo, which offers one-day transfers without incurring transaction fees.

That doesn’t mean Mom and Dad aren’t in on the trend. The more kids in a household, the more likely you are to use a digital wallet to send money with ease and potentially no cost. This partially accounts for the 42% of married couples and people in a domestic partnership and the 35% of separated people who use a digital wallet.

Who’s spending more with their digital wallet?

The more income and education you acquire, the more likely you are to use and spend more with a digital wallet. While those who have  a master’s degree are more likely to use a digital wallet, students are swiping hard at the online bookstore as the biggest users of the digital wallet (63%), followed by workers (57%), the self-employed (49%) and homemakers (39%). Six-figure earners are also twice as likely to use a digital wallet compared to those making $50,000 a year (30%).

Men are not only more likely to use a digital wallet than women, but they also use them more frequently. Slightly more than half (51%) of men have used a digital wallet in the past year, compared to 39% of women. They tend to use this technology for more than money transfers and other banking purposes, and they spend a lot more. In fact, men are three times more likely to use their digital wallets every day.

embracing-digital-wallet-infographic

Why switch to a digital wallet?

  • Money transfers are a cinch. No need to worry whether you have the same bank. Sites like Venmo let you transfer to your friends for free and within 24 hours to three days (depending on the provider and method).
  • No need to keep track of what you owe. You can pay or charge people in real time. Requests are sent immediately, and money exchanges within seconds.
  • Thin out your pocketbook. You can streamline your charges and pay directly through your service. Meaning you don’t have to carry a wallet full of cards and cash.

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