Emerging rails like real-time payments, stablecoins, and central bank digital currencies have quickly created a fragmented payments ecosystem. This environment presents both an opportunity and a challenge for digital wallet companies: they could become the nexus for all payment types if they can build mechanisms to connect disparate sources into a single solution.
Although digital wallets have gained solid momentum in peer-to-peer and e-commerce spaces, they are not yet an all-encompassing solution. To achieve broader adoption, digital wallets must incorporate near-field communication (NFC) technology to enable account-to-account (A2A) payments in physical stores.
As IDEMIA highlights in its whitepaper, From One Click to One Tap to Pay: How Next-Generation Digital Wallets are Unlocking In-Store Account-to-Account Payments with NFC, once digital wallets adopt this technology, they can become the next big evolution in the payments landscape.
Finding the Middle Ground
As traditional payment types like cash and checks have steadily declined, an increasing array of alternatives have emerged in their place.
Cards remain the most predominant payment type, but real-time payments, mobile money systems and CBDCs have all achieved varying degrees of consumer adoption and merchant acceptance. As alternative payment methods gain traction, digital wallet providers are under pressure to innovate and differentiate themselves and adopt new solutions.
“Digital wallets leverage payment methods such as real-time account-to-account payments, which rely on their own dedicated rails,” said Eric Lassouaoui, Head of Digital Payment Product and Solution Architecture at IDEMIA.
“Now, they have reached a stage where they are positioning themselves at par with rails such as cards.” he said.
This convergence of factors has left many digital wallet providers scrambling to find a middle ground between the payment rails they have implemented to attract consumers and the most efficient, cost-effective ways to drive transactions.
Fragmentation and Interoperability
Although many digital wallet providers are struggling to navigate the evolving payments landscape, the technology they need is already within reach. Digital wallets have emerged as the primary front-end solution to connect and converge these payments rails.
The effectiveness of digital wallet technology is clear from the sheer number of wallets that have launched—and the diverse use cases they now serve.
This landscape includes big tech wallets from Apple and Google, as well as all-in-one super apps like WeChat Pay and Grab. There are also retail-specific digital wallets, such as those from PayPal, Amazon, and Starbucks. In the financial services sector, banks have introduced their own solutions, including Zelle and Paze, while card networks have issued wallets such as Click to Pay.
Notably, some of the most successful digital wallets globally are those designed with domestic markets in mind—for example, Spain’s Bizum and Brazil’s Pix.
“We can see that in Brazil, with Pix, they have already been able to demonstrate for the past few years the capability to grab a big chunk of payment transactions—and they are even now trying to create more cross-border payments.” Eric Lassouaoui said.
The success of Pix and India’s United Payments Interface (UPI) has prompted many other regions to explore their own digital wallet solutions. However, this regional approach has also resulted in greater fragmentation across the sector.
“We already see an emergence of many wallets in Europe, and in many countries,” Lassouaoui said. “Several entities have been also already initiating this work with Bizum in Spain and Blik in Poland. There will definitely be a challenge moving forward in regard to the interoperability of those different wallets. That’s going to be a clear, key aspect and especially in Europe.”
In-Store and Proximity
Amid these challenges lies a significant opportunity for digital wallet providers. Digital wallets already account for roughly half of all e-commerce transactions, yet only about 30% of point-of-sale (POS) transactions are conducted through them.
Since their greatest growth potential is in the in-store experience, digital wallets must incorporate NFC technology to enable single-tap experiences, account-based payments at physical points of sale.
There are already solutions gaining traction with this model, solutions like Spain’s Bizum and Brazil’s Pix are now moving beyond peer-to-peer transactions to support contactless, in-store payments through NFC. Similarly, PayPal has introduced a contactless wallet in Germany designed for in-store shopping.
The rise of NFC-powered payments has been fueled by the widespread availability of the technology on smartphones. Additionally, Apple’s recent decision to open its NFC tech to third-party developers has sparked renewed interest in contactless payments.
Still, widespread adoption of contactless payments remains a complex challenge. To expand beyond P2P and online transactions into everyday in-store purchases, digital wallet providers will need to fully embrace NFC technology.
Once they do, digital wallet companies will be able to deliver the seamless payment experience their customers have come to expect.
“Digital wallets can play a significant role in this competitive ecosystem by capitalizing on the customer relationships they already own,” said Eric Lassouaoui. ”Positioned at the front end and supported by existing adoption in P2P and e-commerce, wallets can naturally extend into proximity and in-store payments.”
“By doing so, they have the potential to reshuffle the market dynamics and strengthen their competitiveness, especially when combined with value-added services such as loyalty programs,” he said.
Routing the Path to NFC Payments
Digital wallet providers seeking to bring account-based payment solutions to merchants have two options: they can either build a private in-store acceptance network or rely on existing card acceptance infrastructure at POS terminals.
Once digital wallet companies have implemented contactless payments, they can then leverage flexible transaction routing. This brings them to another fork in the road: their transactions can either be processed directly by the alternative network, which offers greater independence, or routed through an established card network, which is faster to market and has broader acceptance.
Regardless of the route, there are significant benefits for the companies that enable NFC payments.
For example, contactless payments allow providers to offer cost-efficient and locally tailored account-based wallets. This model also gives organizations stronger control over their products, which in turn gives digital wallet firms the freedom to differentiate themselves without external dependencies.
Finally, adopting NFC payments can lead to substantially higher wallet adoption and usage, since payments are frictionless and convenient for customers. “Previously, many wallets relied on QR-led flows, fine for peer-to-peer payments but slower at the point of sale.” Lassouaoui said. Tap-to-pay by account offers a faster, more convenient experience for consumers, further encouraging adoption and usage.
“On the other side, Apple has been driving the payment experience within a mobile environment with its tap-to-pay experience, so the consumer is used to presenting their phone at the terminal,” he said. “Those that want to compete with big tech need to match that tap experience and that’s exactly what our stack enables, bridging wallet assets with the existing EMV ecosystem.”
Bridging Cards and Accounts
By bringing together emerging and traditional systems, digital wallet providers gain operational autonomy and increase their competitive edge—all while enhancing the customer experience.
The key to moving into this model is contactless payments, meaning that embracing NFC is no longer optional—it has become essential. As the global payments landscape continues to shift, platforms like IDEMIA’s Tap to Pay by Account present a strategic opportunity for wallet providers to lead the next wave of in-store innovation.
“On our side, we are one of the unique technological providers, capable to bridge this gap between alternative payment rails and the EMV ecosystem. This is coming from the background we have on the digitization of any card asset into a device and the capability to bridge the EMV world with the account world.” Lassouaoui said.
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