What the US Can Learn From Europe’s Digital Wallet Renaissance

Digitization over the past decade-plus has transformed the back office with next-generation software solutions. But it’s not just the back office; innovations like digital wallets have been transforming the proverbial back pocket, too.

The impact digital wallets are having as mobile technology advances and consumer preferences shift is becoming impossible to ignore — particularly outside of the United States, where digital wallets are evolving beyond payment tools and offering a broader range of functionalities that cater to diverse needs.

“In Europe, we have been quite advanced in digitization of payments, and the usage of digital wallets has been growing rapidly,” Deniz Oran, head of payment partnership, EMEA at Google Wallet, told PYMNTS.

“The journey for many people starts with adding the payments credential, then very quickly once they’ve become accustomed to using the digital wallet, they add other credentials such as loyalty cards, boarding passes, transit and event tickets, and the list goes on,” Oran explained.

Younger generations, who tend to be digital natives, are most responsible for driving the adoption of digital wallets for both payment and non-payment use cases.

Read also: Digital Wallets Beyond Financial Transactions: A Global Perspective

Digital Wallet Adoption: A European Perspective

Oran highlighted that the adoption of digital wallets in the United Kingdom and European Union has been significant, particularly compared to other regions.

“Every day starts with the phone,” she explained. “It ends with the phone. And for younger generations, what we see is they want to be truly able to leave their physical wallet at home.”

In the U.K., for instance, there is a higher propensity to store digital credentials, such as payment cards and loyalty programs, in digital wallets. Beyond payment cards, users can now store items like car keys, corporate badges and driver’s licenses in some regions. The goal is not just to digitize these credentials but to make their digital versions more useful. Features like timely reminders and notifications are designed to integrate these credentials into users’ daily lives more seamlessly, Oran explained.

However, the actual use of these stored credentials is lower in some regions than others, highlighting key areas for growth.

Oran pointed out that this discrepancy in usage may be due to the diverse range of credentials stored in digital wallets, some of which are not used as frequently as payment cards. For example, the partnership between Google and the U.K.’s HM Revenue and Customs (HMRC) allows users to store their national insurance numbers in Google Wallet. While this is a critical credential to have on hand, it does not require frequent use.

This phenomenon illustrates the broader trend in digital wallets. As they become repositories for a wide array of credentials, usage patterns are naturally becoming more varied.

At the same time, one of the critical challenges in the widespread adoption of digital wallets is ensuring consistent and reliable connectivity. As Oran noted, internet access is not always guaranteed, particularly in areas with varying levels of infrastructure across the EU. However, Google Wallet has worked to address this challenge by enabling a limited number of transactions without internet connectivity using NFC technology. This is particularly useful in transit systems, where underground stations may lack internet access.

See also: Consumers Are Using Digital Wallets for More Than Payments — Here’s How

The Future of Digital Wallets: Beyond Transactions

Interoperability is another issue digital wallets must overcome for widespread adoption. This is especially true across the EU, where diverse regulatory landscapes and local payment methods can complicate seamless use across borders.

“Payments are a local business,” noted Oran.

She stressed that Google is committed to supporting as many diverse payment methods as possible, working closely with the ecosystem to ensure that its digital wallet remains functional across different regions. This commitment to openness and interoperability is crucial for creating a frictionless user experience, a core value that aligns with Google’s overall approach to product development.

“Especially with digital wallets, not having walled gardens is something we care a lot about,” said Oran.

As digital wallets become more integral to daily life, the need for robust security and privacy measures becomes even more critical. In regions like the U.K. and the EU, where regulations such as General Data Protection Regulation (GDPR) are stringent, balancing convenience with security is a complex task.

“The user experience journey is at the core of digital wallets, and at the same time, safety and security are what’s needed for user trust,” Oran explained. “One cannot come at the cost of the other, so security and privacy needs to be built into every part of the wallet … especially when you think about the payments piece, which is the foundational layer, the security is really built in there because the payments are based on tokenization.”

Looking ahead, she suggested that the future of digital wallets lies in expanding their use cases beyond transactions. As more non-transactional credentials are integrated into digital wallets, they will likely lead to increased usage for payment transactions. The relationship is symbiotic, as the more functionalities a digital wallet offers, the more indispensable it becomes in users’ lives, driving further adoption and innovation.

In Germany, for example, Google partnered with a local company to enable the storage of a digital QR code for restroom access at highway rest stops — a uniquely local use case that highlights the potential for digital wallets to integrate seamlessly into everyday life. This kind of innovation meets specific regional needs and demonstrates the versatility of digital wallets.