The global mobile wallet market is forecast to hit $7.6 trillion by 2027, having stood at just over $1 trillion in 2019, according to a new report.

Allied Market Research said the expansion equated to a compound annual growth rate (CAGR) of 28.2% between 2020 to 2027, driven mainly by a soaring number of mobile subscribers worldwide and increased adoption of the mobile wallet as a digital payment business model.

The report identified that a rise in government-backed initiatives to encourage a cashless economy – helped in recent months by moves to reduce person-to-person contact during the COVID-19 pandemic – was another major driver of the growth. However, concerns around fraudulent transactions and data security continued to hamper the market’s expansion.

In 2019, the remote segment held the largest share, the report found, accounting for nearly three-fifths of the global mobile wallet market.

It put this down to the enduring popularity of smartphones and the rise in the trend of purchasing digital and physical goods via mobile wallet accounts.

Despite this popularity, the report concluded that the proximity segment – smartphone-based replicas of debit or credit cards that can be used with contactless payment technology – is expected to register the highest CAGR of 29.8% during the forecast period. This was as a result of an expected increase in the number of smartphone users, along with the emergence of contactless technology for transport ticketing purposes.

By application, the telecommunication segment of the market is set to register the highest CAGR during the study period at 35%, while the retail segment held the largest share in 2019, when it accounted for more than one-third of the global mobile wallet market.

Geographically, Asia Pacific held the biggest market share last year, contributing to more than two-fifths of the market.

The report revealed that the region was expected to register the highest CAGR of 30.5% during the forecast period, due to the drastic shift to digitalization and internet capabilities.