Digital Wallets are Being Added at an Exponential Rate with PayPal’s Venmo and Square’s Cash App Onboarding Millions of Consumers: Report

Digital or online wallets are adding new users at an exponential rate, according to a recent report from ARK Invest. The report revealed that PayPal’s Venmo and Square’s Cash App have managed to onboard around 60 million users organically in the past 10 and 7 years, respectively. This is notably a milestone that took J.P. Morgan, the largest US bank, more than 3 decades and five major acquisitions to reach.

ARK’s research confirms that in the next 5 years, the number of US digital wallet users is expected to more than double to 227 million – which would help generate a market cap of approximately $830 billion “if investors value each user at roughly $3650, the average valuation per US bank customer at year-end 2019.”

As noted by ARK Invest:

“In our view, $3,650 is quite a conservative valuation for Digital Wallet users given banks’ poor track records in cross selling their services. On average, US consumers use only 1.8 products per financial institution. Digital Wallets should be able to provide and extract more value per customer as we believe they cross sell more services successfully thanks not only to a more user-friendly experience but also to the convergence of their 24/7 data collection advantage and artificial intelligence.”

The report from ARK Invest also mentioned that by the end of 2020, the company expects the number of J.P. Morgan Chase deposit accounts to total around 60 million. Meanwhile, Cash App should be able to scale to around 59 million annual active users (AAUs) and Venmo to about 69 million.

Digital wallets are increasingly being adopted by consumers across the globe. They’re quite useful in countries where people don’t have access to modern financial services or have problems opening a regular bank account.

Digital wallet provider EasyPaisa recently partnered with Fintech firm PayFast to accelerate virtual payments adoption in Pakistan.

Indonesian digital wallet providers GOPAY, Dana, LinkAja, and OVO have managed to onboard a large number of users who are now part of one of the world’s fast-growing economies.

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