Financial Education Blog

The history of digital wallets

*This is the first installment of a three-part blog series focusing on digital wallets. Check back for more information.  

Digital wallets have grown in popularity since they were first introduced over 20 years ago. Digital wallets allow users to quickly and easily make purchases in-stores and online, withdraw cash from ATMs, and send money peer-to-peer giving the user greater flexibility and convenience in payment choice. Since 2019, there has been an explosion in use, and the coronavirus pandemic is pushing more people towards cashless options. To grasp why the popularity of digital wallets has grown, it is important to understand how they got their start.
 
The origin of digital wallets
 
The origins of digital wallets began over 25 years ago with then 21 year-old entrepreneur Dan Kohn in Nashua, New Hampshire, who sold a CD over the internet via credit card payment.
  • 1994: First online purchase is made. A CD of Sting’s Ten Summoner’s Tales is sold for $12.48 on NetMarket.
  • 1997: First mobile payments and first contactless payments is made. Coca-Cola installs two vending machines in Helsinki that accept payment by text message.
  • 1999: PayPal launches electronic money transfer service. Early on, PayPal’s user base grew nearly 10% daily. Tesla CEO Elon Musk and venture capitalist Peter Thiel were among its co-founders.
  • 2003: Alibaba launches Alipay in China. Today, the mobile payment platform has witnessed stunning growth — leveraging digital wallets accepted by merchants in over 50 countries and regions.
  • 2007: M-PESA creates the first payments system for mobile phones. Kenya-based M-PESA launched its mobile banking and microfinancing service. Today, it has over 37 million active users on its platform across Africa.
  • 2009: Bitcoin enables secure, untraceable payments. Satoshi Nakamoto develops the first decentralized payment network in the world.
  • 2013WeChat Pay is rolled into the popular messaging platform. By 2018, it surpasses 800 million monthly active users.
  • 2014: Apple Pay launches. By 2023, over $2 trillion of mobile payment transactions could be authenticated by biometric technology.
 
Google became the first major company to launch a mobile wallet in 2011. 2012 saw Apple’s Passbook, while not for mobile payments, could be used for boarding passes, tickets and coupons. Apple Pay came two years later. Launched in the US, it quickly spread to the UK and China. 2015 brought Android and Samsung Pay. Ever since, digital wallets like GrabPay, Lazada Wallet, PayPal, Touch ‘n Go, VCash, and many more, have made this mode of payment quite popular. 
 
Digital wallets were first introduced at 7 17 Credit Union in 2016. Our first digital wallet was Apple Pay, and we have expanded to include Google Pay and Samsung Pay. To learn more about our digital wallets, visit https://www.717cu.com/Personal/Services/Digital-Wallets.
 
What is a digital wallet ?
A digital wallet provides the user the convenience of storing one or more methods of payment digitally. Instead of carrying cash or even cards, the user just stores his/her payment information on a smart device, like a phone, a watch or a tablet, locked and protected by a password. Other information such as store loyalty card information and digital coupons can also be stored.
 
Digital wallets are a secure payment method as user information is highly encrypted.
 
By 2025, digital wallets are expected to become the second most-preferred payment method.
Learn more:
https://techbullion.com/mobile-wallet-origin-history-financial-technology/
https://www.visualcapitalist.com/digital-payment-adoption/