The proportion of card payments made using “digital wallets” such as Apple Pay and Google Pay has more than tripled in the past few years, according to industry figures.
The total share of transactions in the UK made using such software on mobile phones and other devices increased from 8% in 2019 to 29% in 2023, it is estimated.
The figure comes in a new report by the British Financial Conduct Authority and the Payment Systems Regulator.
They also found that approximately 20% of card holders used a digital wallet for more than 50% of their card transactions in 2023.
However, the regulators warned there were several potential challenges and risks related to the growing use of the technology.
The report cautioned that some people may become “more dependent” on digital wallets, which could leave them in difficulties – and harm the wider financial system – if the technology fails and they do not have backup options such as physical cards or cash.
The risk of theft from people’s accounts via stolen devices was another issue highlighted, with the regulators warning that criminals have been adapting their tactics to get around security measures.
There are also concerns over competition, amid market dominance by the likes of Apple and Google – particularly over allowing third party companies to operate digital wallets on other firms’ wearable tech, such as smart watches and rings.
But the regulators said the use of the technology, if handled correctly, represented “a significant opportunity for innovation and growth”.