Unlocking the benefits of digital wallets

Executive Summary

Digital wallets have become an essential financial service for many UK consumers. They serve as a means of seamless in-store contactless transactions and online purchases, and a repository for payment cards, travel passes, event tickets, and loyalty cards.

However, the provision of digital wallets is not competitive and a market barely exists. Digital wallet use is dominated by the two largest mobile providers, Apple and Google. Generally speaking, iPhone users use Apple Wallet and Android users use Google Wallet. Although the increasing use of digital wallets brings many benefits to consumers, both of these big tech firms have faced scrutiny from the Financial Conduct Authority (FCA), Payment Systems Regulator (PSR) and most recently the Competition and Markets Authority (CMA) for anti-competitive behaviour.

Through a combination of hardware restrictions and online choice architecture like pre-installation and defaulting, Apple and Google have been accused of creating barriers for rival digital wallet providers to compete on a level playing field, effectively exploiting their market share to shut out the competition. As a result, consumers are left without a meaningful choice between which digital wallet to use. 

The lack of competition also reduces the incentive for Apple and Google to innovate their products and there have been only limited developments in the functionality of digital wallets for over a decade. This lack of an incentive to invest means consumers are missing out on the potential benefits that could be realised from more innovative digital wallet services.

A more competitive market for digital wallets is likely to address these harms, both by allowing competing digital wallet providers to offer alternative products and services, and by incentivising Apple and Google to continue to innovate their own digital wallet offer. However, such a market will not develop unless interventions are made by regulators to shape the market in a way that facilitates competition.

To better understand the benefits of such pro-competitive intervention, Which? has undertaken research to understand the potential value of more innovation in the provision of digital wallets. To do this, we ran a survey of 4,000 consumers to understand how consumers use digital wallets and their attitudes towards choosing a digital wallet. We also used a willingness-to-pay choice experiment to understand consumers’ preferences for innovative digital wallet features and the potential for them to benefit from greater innovation in the supply of digital wallets.

Our survey results find that digital wallets, dominated by Apple and Google Wallet, are used by a majority of UK consumers, often frequently. Consumers predominantly choose their digital wallet based on what was pre-installed and default on their mobile, and most have never considered switching. These results provide evidence of the extent to which Apple and Google have locked consumers into using their own digital wallet services.

The consumer choice experiment revealed a clear latent demand for potential innovation in digital wallets. Participants were presented with hypothetical digital wallets in a choice experiment in which some wallets offered the following innovative features: digital receipt storage, automatic loyalty points, ID storage, and flexible card functionality. Participants indicated a degree of willingness-to-pay a monthly subscription price for increased functionality. Storing digital receipts and the ability for a digital wallet to automate loyalty point collection were the two most highly valued innovative features.

When presented with a choice of hypothetical digital wallets in our discrete choice experiment, 38% of all respondents chose a paid wallet (either £0.50 or £2.50 per month) at least once across the six choice tasks they completed. Younger consumers showed a particularly high willingness-to-pay for digital wallet innovation, with 62% of 18-24-year-olds choosing a paid wallet at least once. Our mixed logit regression model predicts that at a monthly price of £0.50, around six in ten digital wallet users (58%) would choose to pay for a hypothetical digital wallet with all four innovative features, instead of continuing to use a free digital wallet with more limited functionality.

Scaling up our model’s willingness-to-pay results to a population level, the total annual willingness-to-pay is estimated to be in the hundreds of millions of pounds. This estimated willingness-to-pay for a set of hypothetical digital wallets in our choice experiment can be used as a proxy to indicate the value of consumer benefits from increased competition in digital wallets. In doing so, we are not seeking to provide a single estimate of the benefits of innovation in digital wallets as a whole. Instead, these results can be interpreted as an indicative estimate of the value of one version of digital wallet innovation.

Overall, we consider that our analysis provides a conservative indication of the benefits that could be realised from greater competition in digital wallets, and that effective, pro-competitive regulatory intervention should be prioritised by the Competition and Markets Authority.

1. Introduction

1.1 Background

Digital wallets are mobile apps or online services that give consumers access to a range of financial actions. They are mostly used by consumers to store payment information and make payments (both in-store and online/in-app) using mobile phones or other electronic devices. As well as payments, they act as a repository for travel passes, event tickets, and loyalty cards.

The Financial Conduct Authority (FCA) distinguishes between two main types of digital wallet: ‘staged’ vs ‘pass-through’ wallets. Pass-through digital wallets do not hold funds but use the card/account information stored in the wallet to make payments directly to a recipient, and staged digital wallets, like PayPal, hold funds and allow payments to be made by transferring funds stored in the wallet to the recipient. This report focussed on pass-through digital wallets. 

The two dominant digital wallets used in the UK are Apple Wallet and Google Wallet. In both cases, the digital wallet is bundled together with a digital payment service so that they effectively operate as one system. In practice, Apple and Google’s wallets are the consumer-facing app interface that stores card information and provides functionality to make payments, whereas Apple Pay and Google Pay are actually used to facilitate and process payments.

There are considerable benefits from using a digital wallet

Consumers use digital wallets primarily for making contactless payments in-store and as a repository for travel tickets, event tickets and loyalty cards. There are also some examples of additional features, such as incorporating Buy Now, Pay Later (BNPL) functionality, smart keys for cars or your home, and some use of open banking integration. Consumers benefit from the ease-of-use and efficient experience offered by digital wallets, which makes for fast, seamless payment processes and safe, convenient storage of tickets and cards in place of physical alternatives. Security protocols and biometric authentication make digital wallet payments a safe way to pay and protect consumers from security risks, and in some instances provide greater protection than traditional online payment methods, given card details are hidden from merchants during a transaction.

As consumers increasingly have their mobiles with them at all times or within easy reach, being able to tap a phone at a payment terminal or simply bringing up an app to gain entry to a ticketed event can make these regular life transactions simpler and easier than traditional payments methods and physical tickets. In an increasingly cashless world [1], mobile-based digital wallets can almost entirely substitute for physical wallets. As well as benefiting consumers, digital wallets can also be attractive to retailers who benefit from a faster transaction process with higher transaction completion rates. Tokenization, the technology that enables frictionless digital wallets/one-click payments, results in a 5% increase in authorization rates (ie fewer failed payments) compared to traditional transactions [2].

These benefits come with little direct cost to consumers as, while some small providers may charge for a premium digital wallet with additional functionality, the most popular providers make digital wallets available for free and there is no charge or fee when consumers make payments using their wallet. Often, they charge some kind of fee to card issuers/merchants. Sometimes, however, there is little actual revenue generated from digital wallet usage itself, but providers use digital wallets as part of an ecosystem to encourage consumers to use a single suite of products from a single provider, with digital wallets being a component of this. 

1.2 Competition concerns in the market for digital wallets

However, while digital wallets bring benefits to consumers, both Apple and Google have been accused of anti-competitive behaviour that is limiting competition and denying consumers a genuine choice between digital wallet providers. While their success may partly reflect consumers' brand preferences or a genuine desire to use apps from within the same operating system ecosystem, this is unlikely to explain the extent of the market concentration.

Many of these competition concerns relate to restrictions that Apple places on the hardware required by digital wallets. Until October 2024, Apple banned competitors from accessing the NFC (near-field communication) chip, the technology that facilitates mobile contactless payment) on UK mobiles. This meant that there was effectively only one choice of digital wallet for consumers using iPhones - the Apple Wallet. Apple has since made the NFC chip available for third party developers to use, but at a cost which it does not make public.

Apple’s restrictions are not limited to third-party digital wallet providers, it also charges card issuers a fee to allow their customers to use Apple Pay. Since there are few other alternative digital wallets, card issuers are effectively forced to pay this fee or risk not being available for use on Apple’s operating system, iOS. This may both indirectly increase costs for consumers where fees are passed on elsewhere, and have knock-on impacts on competition and innovation in other markets that card issuers are operating in.

These issues have resulted in a collective action case being brought forward against Apple in March 2026 by James Daley. The claim, brought on behalf of an estimated 50 million UK consumers, concerns both the restrictions placed on access to iPhone NFC chips as well as the transaction fees charged to banks and card issuers that are said to be out of line with industry practice and not levied on comparable payment systems in the market. The case is seeking an aggregate award of damages of up to £1.5 billion.

Google does not impose the same NFC hardware restrictions as Apple. However, concerns remain that the control that Google has over its mobile platform allows it to give undue preference to the Google Wallet over competitors. Choice architecture design - like default settings, pre-installation, prominent placement on the home screen and switching prompts - means that even if viable alternatives did exist, consumers are less likely to actively engage with their choice of digital wallet provider. Apple adopts similar choice architecture that gives preference to its own digital wallet.

Crucially, the high barriers to entry imposed by Apple alone may be limiting competition across both of the major mobile platforms. Some stakeholders told the FCA that, given the market power shared between Apple and Google, it may not be financially viable to introduce a digital wallet just on Android. This, as well as choice architecture concerns, likely explains why NFC access on Android has not resulted in significant alternatives.

This anti-competitive behaviour is harming consumers. The FCA and PSR (Payments Systems Regulator) heard that hardware restrictions and choice architecture design have restricted entry to the market. Stakeholders claimed that if the barriers to entry were lower they would have introduced their own digital wallets. The presence of competing digital wallets would increase the choice of digital wallets available to consumers, and better allow consumers to choose a wallet that suits their preferences - be that around brand, security, wallet features or anything else. Additional features that go beyond what Apple and Google’s wallets offer would also increase the quality of the product available to consumers.

In shutting out rival wallets, the incentives for Apple and Google to innovate their own products is reduced. Generally speaking, following the emergence of contactless mobile payments, there has been limited innovation in the functionality of these digital wallets. Apple Wallet launched in 2012 (first as Passbook which stored tickets and, in 2015, as Apple Wallet which integrated contactless payments) and Google Wallet in 2011 (which has also gone through branding iterations since). The ability to store payment cards for online and in-store payments has remained the core functionality of these wallets. BNPL services and smart keys have been added to both Apple and Google Wallets, as well as some limited integration of open banking with the ability to see transaction history and, in the case of the Apple Wallet, bank balances. However, beyond these features there has been little innovation which, given the pace of development elsewhere in digital finance, may reasonably have been expected.

Consumers may have missed out on the best available technology and mobile services as a result.  As the FCA and PSR’s report highlights, “innovation is particularly important in digital wallets as it is a zero-priced service, meaning that improving the consumer experience and enhancing use cases are key to fostering adoption and market growth”.

Regulators are starting to take action

These concerns have prompted regulators to take action. In Europe, the Digital Markets Act (DMA) requires big tech ‘gatekeepers’ to provide third-party developers with interoperable access to the same hardware and software they use for their own services. Following the introduction of the DMA, Apple was found to be in breach of EU antitrust rules and agreed in March 2024 to make a legally binding commitment to open up its NFC technology free of charge to digital wallet providers. Early indications suggest that this intervention is increasing competition among digital wallet providers. In Germany, PayPal launched contactless payments in-store on both Android and iOS, with early signs of success. BLIK and Swish, payment providers based in Poland and Sweden respectively, offer their contactless payment services on Android mobiles only, but have both signalled intentions to expand their services to iOS following the DMA’s interoperability requirements. Curve Pay, an emerging digital wallet based in the UK, also offers their digital wallet on both Android and iOS in Europe but limits its availability in the UK to Android only. Regulators in Japan and Brazil have imposed similar requirements on Apple. 

The UK is moving more slowly than other jurisdictions, but the Competition and Markets Authority (CMA) is currently exploring how to improve the market for digital wallets as part of its Strategic Markets Status investigations into Apple’s and Google’s mobile ecosystems. It has identified digital wallets as a key use case where interoperability is limited and signalled an intention to impose conduct requirements that open up NFC access on Apple devices and prevent both providers from using self-preferencing choice architecture (as signalled in the CMAs investigation roadmaps for Apple and Google SMS investigations, and call for evidence relating to NFC access on iOS).

1.3 Objectives

Which? is concerned that consumers are not getting the best deal when it comes to the quality and choice of digital wallets. The CMA can use the pro-competitive digital markets regime to stimulate greater innovation in digital wallets and unlock the full range of benefits for consumers. The requirements it imposes on Apple and Google will depend on its assessment of what is proportional, but doing so is challenging when the benefits of improving competition are not well understood.

To address this, our research explores the potential benefits to consumers of interventions that encourage competition by exploring the value that consumers place on potential innovations in this market.

The report will set out the methodology used to meet this objective below, before discussing our findings. The appendices contain more detail about the survey, choice experiment and analysis used to conduct the research.

2. Methodology

To meet our objective of demonstrating the potential benefits of increased digital wallet competition, we split our research into two parts. The first was a survey to explore consumer trends and attitudes towards digital wallets such as use of digital wallets, factors for choosing a given digital wallet, and switching habits. 

The second was a discrete choice experiment to understand the extent to which consumers might be willing to pay for hypothetical digital wallets that offered a range of innovative features that go beyond what is available today.

The study was completed by Yonder, on behalf of Which?, with an online survey of 4,216 nationally representative mobile users aged 18+ between 20th and 24th May 2026.

The full questionnaire and choice experiment script can be read in Appendix A.

2.1 Questionnaire

To contextualise the nature of the competition issues in digital wallets, we sought to understand the popularity of digital wallets in the UK and demonstrate that Apple and Google wallets dominate the market place due to a lack of alternative providers and the defaulting they use on their mobiles.

To give effect to this, we asked respondents questions about whether they use a digital wallet, which wallet(s) they use, and how frequently they use them. We also asked about the extent to which respondents use digital wallets exclusively - ie at the expense of physical wallets. We asked respondents why they use digital wallets generally, and specifically why they use their chosen wallet. For non-users, we asked a question about why they choose not to use a digital wallet.

Finally, we asked respondents whether they have ever switched digital wallet provider (or even considered doing so). Based on this, we asked their reasons for having ever switched/not-switched wallets.

2.2 Discrete Choice Experiment

Understanding the extent to which consumers might value digital wallet innovation requires an experimental approach. We used a discrete choice experiment to estimate consumers' potential willingness-to-pay for digital wallets that offer the kind of innovative features that may emerge in the future, and could be more likely to be available, and sooner, in a more competitive market. A discrete choice experiment is an appropriate methodology for assessing willingness-to-pay for different versions of future innovation, as has been done in other market settings such as the development of digital currency or emerging food technologies like lab-grown meats.

Experiment design

The experiment presented each survey respondent with a series of six choice tasks, each of which containing the following four options:

• option 1: a free digital wallet with basic features widely available today (ie contactless payment in-store and loyalty/event ticket storage),
• options 2 and 3: a digital wallet with basic features, plus a selection of innovative features and, in some cases, a monthly subscription fee, and
• option 4: none of the above.

We used existing evidence and our own pilot study to identify innovative features that consumers could benefit from, have a reasonable likelihood of emergence, cover a sufficient range of feature types and were easy for respondents to understand in an experimental setting. As a result, we tested the following four hypothetical innovative features:

1. automatic loyalty points, 
2. receipt storage,
3. ID storage, and
4. flexible cards.

Various combinations of the above features were offered in wallet options 2 and 3, alongside a monthly cost of £0, £0.50 or £2.50.

The choice sets were designed firstly to be realistic and credible, requiring respondents to make meaningful trade-offs between wallet features and subscription prices rather than facing obviously dominant alternatives. Secondly, the experimental design needed to satisfy statistical criteria, including high D-efficiency and a high degree of orthogonality, to ensure that preferences could be estimated precisely. A pilot study was conducted to optimise the choice set design for the main fieldwork. 

There is no guarantee that the features we tested will become commonplace in future iterations of digital wallets. Digital wallet functionality could end up more limited than implied by our hypothetical wallets or go far beyond the features that we tested. This could result in an under or over estimation of the potential value of digital wallet innovation, but given our experiment represents one version of a limited set of innovative features, we consider it to be a conservative approach.

Further details on experimental design including the process to determine innovative features, choice screen set-up, and pilot testing can be found in Appendix B.

Experiment analysis and data quality

The experiment was analysed using a mixed logit regression to assess the relative importance of different wallet features and price, account for differences in preferences between respondents, and estimate willingness-to-pay for premium features.

A very small number of participants (16) did not complete the discrete choice experiment section of the survey so are not included in the experiment analysis. A further 72 respondents were classified as extreme speeders, having spent less than two seconds on at least one task, and were therefore excluded from the analysis. This gave a total sample of 4,128 consumers for the discrete choice experiment. 

Whilst we conduct descriptive analysis on the full sample, our main logit model looks at current users of digital wallets only, since those with experience of using a digital wallet are more likely to be able to meaningfully compare hypothetical wallet offerings. Therefore the sample for the main model is 2,582. The report also examines separately the 1,546 consumers who do not currently use digital wallets. 

Further details on the econometric model specifications and sensitivity analysis conducted can be found in Appendix C.

3. Use of and attitudes towards digital wallets

3.1 Digital wallet use

Digital wallets are widely used, particularly by younger consumers

Overall, 62% of consumers say they currently use a digital wallet. There is a notable age difference among users, with digital wallets considerably more popular among younger age groups. Nearly 9 in 10 (88%) 18-24 year olds use a digital wallet compared to around a third (34%) of 65-plus year olds. As shown in Figure 1, for all age groups up to 65-plus, more consumers use digital wallets than not.

Digital wallet use was higher among iPhone users (80%) than Android users (53%). However, rather than an indication of digital wallet use being driven by which mobile operating system you use, this likely reflects the fact that iPhones are used more by younger consumers relative to Android mobiles - 67% of 18-24 year olds in our survey use an iPhone, compared to just 26% of 65-plus year olds, whereas 30% of 18-24 year olds use an Android mobile compared to 67% of those aged 65-plus.

Figure 1: Digital wallet use

Most consumers use a digital wallet because it is easy and convenient

The most common reason for using a digital wallet, given by 53% of current users, is that it is easy to use. Similarly, the convenience of having everything in one place scored highly, with 39% identifying it as a reason for use. Other reasons that capture the ease and convenience of digital wallets, highlighted in red in Figure 2 below, include being able to make online and in-store payments quicker (reported by 37% and 33% of users respectively).

Many consumers also identified the functionality provided by digital wallets as a reason for using them (highlighted blue in Figure 2). Being able to pay with a phone or smartwatch was the most popular functional reason (45%), followed by storing tickets, travel passes or loyalty cards (35%). These functional reasons were relatively more popular among older consumers than younger consumers, with younger consumers more likely to favour the ease of use reasons above functionality. Other reasons for using a digital wallet (highlighted in purple), like a perception that it makes payments more secure, were less commonly chosen.

Figure 2: Reasons for using a digital wallet

Most consumers who don’t use digital wallets prefer to use physical payment methods

Among non-users of digital wallets, who are skewed toward older consumers, the biggest reason for not using a digital wallet is a preference for using physical payment methods like cash or card. This was provided as a reason by 58% of non-users of digital wallets. Preference for using physical payment methods is stronger among older consumers (indicated by 61% of 65-plus year olds compared to 36% of 18-24 year olds), but is the most common reason for not using a digital wallet across all age groups.

The next most commonly identified reason was not being able to see any benefit to using a digital wallet (40%). There was some evidence of concern around storage of personal data and payment security, chosen by 37% and 34% of consumers respectively, but to a lesser extent than physical payment preferences and a general perceived lack of benefit from using a digital wallet.

Figure 3: Reasons for not using a digital wallet

Many consumers use their digital wallet frequently and rely exclusively on it for payments when out and about

Three quarters of digital wallet users make payments with their wallet at least once a week while around a third of consumers (32%) use their digital wallet daily. Of the daily users, more than half do so several times a day.

Just 6% of digital wallet users have a digital wallet but never use it to make payments (implying they only use it for other reasons eg tickets or loyalty cards).

Figure 4: Frequency of digital wallet use

Unsurprisingly, and as with overall usage, frequency of use is highly correlated with age. Figure 5 shows a strikingly symmetrical inverse trend between age groups for those who use their digital wallet frequently (at least daily) and those who use it infrequently (less than once a week). Just over half (52%) of the youngest cohort, 18-24 year olds, use their digital wallets daily compared to only 11% of 65-plus year olds. It is almost the inverse for those using their digital wallet less than once a week, with just over half (51%) of 65-plus year olds using their digital wallets less than once a week compared to 7% of 18-24 year olds. There is broadly a linear trend for the age groups between these two ends of the scale.

iPhone users are more likely to use their digital wallet frequently than Android mobile users (39% vs 24% overall), although like usage this is likely driven by the fact that they have a higher proportion of younger users.

Figure 5: Frequency of digital wallet use by age

We also asked consumers how often they relied exclusively on digital wallets for making card payments when out and about on a scale of ‘Always - I never carry a physical card on me if I have access to my digital wallet’ to ‘Never - I always have a physical card on me regardless of whether I have access to my digital wallet’. Around half (49%) of all the digital wallet users said they often or always relied exclusively on it for making card payments when out and about.

Again this was correlated with age, but even among older age groups a sizeable proportion are content not to carry a physical card if they have access to their digital wallet - with over a quarter (27%) of 65-plus year olds saying they do this often or always. For younger consumers, around two thirds often or always rely on their digital wallet for payments when out and about (69% of 18-24 year olds and 63% of 25-34 year olds).

Figure 6: Reliance exclusively on digital wallets for payments

3.2 Choosing a digital wallet provider

Apple and Google are by far the most popular digital wallets

Apple and Google wallets are by far the most commonly used, with 50% and 46% of digital wallet users using these two providers respectively. The next most popular digital wallets are Samsung Wallet, used by 12% of digital wallet users, but with a large proportion of these people also using Google Wallet. Smaller wallet providers available in the UK like Curve Pay, Garmin Pay and Huawei Wallet have a very small market share (around 1% of all users).

Figure 7: Most used digital wallets

Consumers typically use their chosen wallet because it is pre-installed on their phone

As shown in Figure 8, the most common reason for using their preferred digital wallet, given by 48% of users, is that ‘it was already set up on my device or account’, for example because it comes pre-installed on a mobile. The next most common reasons for using a given wallet, like the reasons for using digital wallets generally, are about ease of use and speed (‘it is easy to use’ - 46%, ‘it is quick’ - ‘37%’, ‘it was easy to set up’ - 37%). These reasons for using a given digital wallet are broadly consistent across age groups.

Just 7% of digital wallet users said that they use their preferred wallet because ‘it has useful features that other wallets don’t have’.

Figure 8: Reasons for choosing preferred digital wallet

Most consumers have never considered switching the digital wallet they use

The majority of digital wallet users, around three quarters (74%), have never considered switching providers, while 16% have considered it but didn’t end up switching.

Older consumers are more likely to have never thought about switching, with 93% of 65-plus year olds never considering switching compared to 66% of 18-24 year olds. It is also more common for iPhone users to have never thought about switching, with 78% of iPhone users never considering it compared to 70% of Android users.

Two reasons stand above the rest when it comes to why consumers don’t switch their digital wallet provider, that they simply haven’t thought about switching (46%) and that they are happy with their digital wallet provider (45%). That they haven’t thought about switching is indicative of the fact that consumers do not actively engage with their choice of digital wallet. This is likely to be a reflection of the lack of viable alternatives which mean there is not currently a meaningful choice for most consumers to make.

It is notable that just 5% of consumers haven’t switched digital wallets because they don’t think other wallets would work with their mobile device. This was given as a reason by 6% of iPhone users, despite the restrictions Apple places on NFC access to third party wallet providers, and 4% of Android users.

Figure 9: Reasons for not switching digital wallet provider

Only 7% of digital wallet users have switched which digital wallet provider they use, just over 200 people in our survey. The most common reasons for switching were that consumers got a new phone and either this worked better with a different digital wallet (27%), or that it came with a different digital wallet already set up (25%). There is also evidence that people have switched to a digital wallet that had more or better features (25%).

Digital wallet switching rates are comparable between iPhone and Android users, with 7% of iPhone users having ever changed their wallet compared to 8% of Android users. It is not possible to determine the extent to which this is attributable to consumers switching phones as much as switching digital wallet providers on the same phone. However, given the limited ability to use third-party digital wallets on Apple, a comparable switching rate between Apple and Android indicates that even with more flexibility to use different digital wallets on Android, there isn’t a well functioning market with providers competing for different users.

Figure 10: Reasons for switching digital wallet provider

Our survey shows that digital wallets, predominantly Apple Wallet and Google Wallet, are widely used by UK consumers. They are used frequently, and in many instances are relied on for payments in place of traditional physical cards. Digital wallets are clearly more popular among younger consumers, but there remains a sizable number of active users across all age groups.

Consumers tend to use the wallet that comes with their phone and very few change which digital wallet they use unless they get a new phone.

To understand further whether this lack of engagement with digital wallets is a result of genuine satisfaction with digital wallets used today or if there is demand for greater innovation in digital wallets, we gave consumers a choice experiment and the findings from this study are explored below.

4. Demand for digital wallet innovation

In this section we present the analysis of the online choice study to understand consumer preferences for potential innovation in digital wallets.

4.1 Willingness-to-pay for digital wallet features

When presented with a choice of hypothetical digital wallets in our discrete choice experiment, respondents indicated a degree of willingness-to-pay for increased functionality. At an individual level, 38% of all respondents (including both current users and non-users of digital wallets) chose a paid wallet at least once across the six choice tasks they completed. 16% chose a wallet at the higher monthly price of £2.50 at least once. 

Consistent with the wider survey results of higher usage among younger people, we find younger consumers are considerably more likely to choose a paid-for digital wallet in the choice experiment. 62% of 18-24 year olds chose a paid wallet at least once, compared to a fifth (19%) of those aged 65+.

Figure 11: Proportion of respondents choosing a paid-for wallet at least once by age group

We also looked at the propensity to choose a paid wallet at a choice level, rather than just an individual level. As shown in Figure 12, among all choices made, a paid wallet was chosen around a fifth of the time (19%), with 14% of choices being at the lower £0.50 price level, and the remaining 5% at the £2.50 level.

Both the ‘none of the above’ or the free basic wallet options were included in every choice set, and were selected in just over half (52%) of all choices. The remaining 48% of choices were therefore for a digital wallet with innovative features over and above a free basic wallet, intended to reflect free-to-use wallets like those offered by Apple and Google today.

Figure 12: Break down of all choices made in the choice experiment

The number of choices for a digital wallet with increased functionality, either free of charge or at a cost, indicates that there is some appetite for innovative features beyond what is available on digital wallets today. With nearly two-fifths (38%) of consumers choosing a paid wallet at least once, there is also evidence of demand for innovation even when associated with a monthly cost.

Most of the appetite for paid innovative wallets comes from current digital wallet users. As might be expected, those who do not currently use a digital wallet were substantially less likely to choose paid innovative wallet options, or any wallet at all. More than half (53%) of those who do not currently use a digital wallet opted not to choose any of the wallets presented across any of their six tasks, whether paid or free. That being said, there were indications that some non-users could be persuaded to adopt a paid digital wallet with innovative features as 23% of non-users chose a paid wallet at least once over their six choices. 

Figure 13: Proportion of digital wallet users and non-users who ever chose a paid wallet

Each of the features tested increased the likelihood of selecting a hypothetical digital wallet among current users 

Using a mixed logit model we can demonstrate the impact of different features on respondents’ choice of digital wallet. We chose a mixed logit model over a conditional logit model as it allows for individual differences in preferences. Further details on analytical decisions are contained in Appendix C. Positive coefficients indicate that an attribute increases the utility associated with an option and therefore increases the probability that it will be chosen. Negative coefficients indicate that an attribute reduces utility and decreases the probability of selection.

Although current non-users of a digital wallet are included in the research, the main model only includes current users as they are more likely to be able to meaningfully evaluate different offerings. 

Unsurprisingly, the monthly subscription price coefficient was strongly negative (β=−1.377), indicating that a higher price makes it less likely that a given digital wallet will be chosen. Meanwhile, each of the innovative features tested generated an increase in utility, with receipt storage and automatic loyalty points generating a stronger positive effect than flexible cards and ID storage. The relative size of these effects suggests that consumers were sensitive to price, but that the additional functionality of receipt storage and automatic loyalty points could compensate for some of this. 

Notably, the random coefficient standard deviation (SD) for each feature was very large compared to the mean coefficient itself and highly significant. This indicates individual preferences are highly heterogeneous.

Table 1: Preference estimates from the mixed logit regression model on digital wallet users

There is a higher willingness to pay for automatic loyalty points and receipt storage than ID storage and flexible cards

While the regression coefficients indicate the relative importance of each feature, willingness-to-pay estimates express these preferences in monetary terms. Looking at each of the innovative features in turn, we use the coefficients from the model to calculate respondents' willingness-to-pay for each feature.

Our estimates indicate the additional monthly price current digital wallet users would be willing to pay for a wallet offering a given feature. Willingness-to-pay ranged from £0.27 to £0.39 per month for the four features, with receipt storage and automatic loyalty points eliciting a slightly higher willingness-to-pay than ID storage and flexible cards. The relative ranking of these features in terms of willingness-to-pay broadly reflects the stated preference ranking observed from the pilot study, where receipt storage and automatic loyalty points were the features consumers were most commonly interested in. 

Table 2: Monthly willingness to pay for digital wallet features based on regression model coefficients

The total implied willingness to pay for the bundle of all four features is £1.36 per month. It should be noted that this estimated willingness-to-pay for the full package assumes that the value of the individual features can be added together. In practice, there may be diminishing returns from adding further features.

While an overall willingness-to-pay is a helpful indication of how much features are valued on average, we know from our model that there is a great deal of individual variation in preferences. Including an interaction between age group and price in the model shows that the average willingness-to-pay is higher among younger compared to older consumers. The estimated willingness-to-pay for all four innovative features ranged from £2.12 in the 25-34 age group to £0.72 for over 65s. Further detail on the model with age/price interactions is contained in Appendix C.

The model predicts fairly strong uptake among digital wallet users for hypothetical innovative wallets compared to a free basic one or none at all.

We can also use our model to predict the uptake of paid-for hypothetical digital wallets with innovative features over and above the free basic wallet. At a monthly price of £0.50, the predicted probability of digital wallet users choosing a paid wallet with just one innovative feature over a free basic digital wallet ranges from 40-44%, rising to 58% for a wallet with all four features compared to a free basic wallet.

At a price of £2.50 per month, the probability of choosing a hypothetical wallet over and above the free basic digital wallet was naturally lower, but still meaningfully high, ranging from 6-7% for a single-feature wallet, to 34% for a full-featured wallet.

Table 3: Predicted probability of digital wallet selection compared to a free basic wallet or none at all

Consistent with our other findings around age, the predicted probabilities of selection were higher among younger age groups. Predicted selection of a wallet with all four features compared to a free basic wallet among 18-24 year olds was 61% at a monthly subscription price of £0.50 and 43% at £2.50, and almost identical among 25-34 year olds. Predicted uptake was almost as high in the 32-44 year old age group, and then there is a dramatic drop-off for a £2.50 per month wallet in age groups 45-54 and older. Uptake probability at £2.50 was just 12% for those aged 55 or older. Uptake at the £0.50 price point dropped far less across age groups. 

Figure 14: Predicted probability of choosing a digital wallet with all four features compared to a free basic wallet or none at all, by age

These results show that the marginal value of innovative features decrease as more are added to a hypothetical wallet package, but that overall there is a fairly strong appetite from respondents for innovative digital wallet features - particularly among younger respondents. 

4.2 The value of digital wallet innovation

Our results indicate that there is latent demand for digital wallet innovation, in the form of the four features tested in our discrete choice experiment, and that this demand is material especially among younger consumers. 

There are a number of ways to consider the potential value of this demand in monetary terms at a UK-wide level. Below we set out three illustrative estimates for what the discrete choice experiment results indicate about the value of innovative hypothetical digital wallets. 

It should be noted that the estimates presented below are intended to be illustrative rather than predictive. They are based on respondents' choices of our hypothetical set of digital wallets. The analysis is necessarily limited to these features, and is not a reflection of the likelihood of these particular innovations materialising.

Scaled up willingness to pay estimates

One method for estimating the value of innovation in digital wallets is to use the willingness-to-pay figures generated by the model coefficients. For example, the model-implied mean willingness-to-pay for a premium wallet containing all four features was £1.36 per month among current users of a digital wallet (62% of consumers). This equates to an estimated value of £558 million per year across all consumers. The estimated annual value for each of the features alone was between £107 million and £178 million across the population, as shown in Table 4.

These figures are calculated from our implied willingness-to-pay analysis based on the average estimated preference coefficients among digital wallet users. It assumes that current non-users of a digital wallet would not be willing to pay for additional features.

Table 4: Willingness to pay at a population level

Estimates from modelled product scenarios

Alternatively, we can use the model predicted uptake of different digital wallets (Table 3) to estimate the potential value of digital wallet innovation across the UK adult population. Using the predicted uptake estimates, we calculate potential value by multiplying the probability of selecting a given hypothetical digital wallet with the cost of that wallet and the number of adults in the UK. 

The results for different combinations of digital wallet features priced at £0.50 per month are shown below. When a single feature is offered at this price, the implied value across the UK ranges from £83 million for ID storage or flexible cards to £91 million for automatic loyalty points. This increases to £119 million for a digital wallet offering all four innovative features from our experiment. 

Table 5: Total value of hypothetical digital wallets at £0.50/month

Considering the same calculation but at a cost of £2.50 per month, the estimated value is £67 million to £76 million for a single innovative feature and up to £348 million for a digital wallet offering all four innovative features, as set out in the table below.

Table 6: Total value of hypothetical digital wallets at £2.50/month

Note, this prediction of uptake is based only on this version of a digital wallet over and above the free basic wallet as the reference point in our choice experiment. In reality, consumers would make decisions based on a wider set of options with more than two wallets. We can not determine whether this assumption would over or underestimate the total value of digital wallet innovation. These predictions also assume zero uptake among current non-users of a digital wallet, but this may be a conservative estimate if the introduction of additional features drives an increase in uptake or the number of users increases over time because younger consumers are more likely to use digital wallets.

5. Conclusions

Our study captures a range of consumer preferences about how and why they use digital wallets that are available today, as well as indications of their preferences in an imagined future world with more innovative digital wallets. These findings support a case for a more competitive digital wallet market that increases the choice and quality of services available to consumers.

As our survey shows, digital wallets are widely used in the UK, in particular for the ease with which they allow consumers to make payments. Apple and Google are by far the most popular digital wallets used and while they are clearly more popular among younger consumers, there remains a sizable number of active users across all age groups. They are often relied on exclusively for payments when out and about, and are used frequently by many. Given the clear preference for younger consumers to use digital wallets, and the general financial technology trend toward evolving ways of making payments, it’s likely that their importance for mobile payments and other use cases will only increase with time. 

Consumers mostly use the digital wallet that is pre-installed on their phone, and are generally not discerning about which wallet they use. Very few have ever switched which digital wallet they use, and if they have it is usually because they got a new phone. 

This lack of engagement with the choice of a digital wallet could indicate that consumers are happy with the wallets currently on offer. However, our findings indicate that, if there were fewer structural barriers preventing consumers from exercising a choice, then there is potential for a market in digital wallets to exist. When presented with hypothetical digital wallets in a choice experiment offering innovative features there was substantial demand for digital wallets that offer increased functionality compared with those available to consumers today. 

As described above, the scale of this latent demand is difficult to assess with any certainty. Our experiment estimates consumer behaviour in response to just one version of what digital wallet innovation may look like - based on the four innovative features presented to consumers. Some of the main benefits from greater digital wallet competition may in fact come in the form of innovation that we didn’t test in this study. For example, innovation in digital wallets facilitated by greater competition may increase the use of account-to-account payments (A2A), which could increase the speed of transactions, put downward pressure on card fees and give greater flexibility over how consumers can manage their money from within a digital wallet. Innovation could also see AI being used more to improve financial management and payments through a digital wallet, for example by helping consumers choose which payment method to use, which consumers have identified they would welcome. As such, we consider our estimate of the potential value of digital wallet innovation to be an indicative but conservative estimation of the potential benefits.

A lack of competition has likely stifled innovation in digital wallets, and consumers are losing out as a result. These findings indicate the potential value of innovation.

Greater levels of competition are needed to unlock the full potential of digital wallets, and allow consumers access to a choice of products that best meet their preferences.

Both Apple and Google have entrenched market power in the mobile operating systems. Regulatory intervention is necessary to realise the full extent of any consumer benefits resulting from using a digital wallet. Any intervention should consider interoperability restrictions, such as those Apple impose on NFC access, as well as choice architecture which gives preference to Apple and Google’s own digital wallet.

The value of any intervention should be considered on its own merit, but the potential scale of consumer benefits this study implies could result from opening up competition in digital wallets, indicates that the benefits of requirements currently being considered to be imposed on Apple and Google (as signalled in the CMA’s investigation roadmaps for Apple and Google SMS investigations) would outweigh any potential costs. Opening up NFC access and improving choice architecture to limit the ability of Apple and Google to give preference to their own digital wallets would not be costly, but the benefits could be substantial. Competition from other digital wallet providers would also incentivise Apple and Google to invest more in innovating their own wallets and the infrastructure that supports them, like NFC. It is therefore important that the CMA prioritises making regulatory interventions that open up this market.

Appendices

Footnotes

[1] Cash payments accounted for just 8% of all UK payments in 2024. UK Finance UK Payment Markets 2026. Available at: https://www.ukfinance.org.uk/system/files/2026-08/PaymentMarketsReport_2026Summary.pdf ↑

[2] As referenced in Which?’s December 2025 Payments report, Visa cites evidence that tokenization (the technology that enables frictionless digital wallets/one-click payments) results in a 5% increase in authorization rates (ie fewer failed payments) compared to traditional transactions. ↑