By Deepak Shukla, founder and CEO of Pearl Lemon Accountants
A new generation of consumers has been trained to use Apple Pay or Google Pay without having to pull out their cards.
For payments leaders, that convenience layer was never really the story. The bigger shift is happening underneath it, inside the rails, the regulation, and the identity layer that wallets are quietly absorbing.
Four forces are converging at once. Direct bank payments are undercutting card rails on cost, regulators are prying open Big Tech’s grip on the wallet itself, payments and digital identity are merging into a single interface, and regional payment networks are pulling volume away from the global card duopoly.
None of these shifts is speculative. They are backed by regulatory deadlines already on the books, wallets that have already signed up tens of millions of users, and market forecasts that keep getting revised upward.
Pay By Bank Is Undercutting Card Rails
Account-to-account payments let a customer’s bank send funds directly to a merchant, skipping card networks and their fees entirely. That’s no longer theory.
Juniper Research projects that cross-border A2A transactions will surpass 11 billion in 2026, driven by faster settlement and lower processing costs.
Why the Cost Gap Matters
A2A transfers often run at a fraction of a cent to a few cents per transaction, compared with the roughly 1.5 to 3 percent merchants typically pay on card volume. That difference compounds quickly for high-volume merchants over a full year, and it shows up again in cash flow.
Instant settlement reduces the working capital businesses need to hold while waiting on card network payouts.
Where Adoption Is Strongest
Adoption is not universal yet. Card-on-file and subscription checkout still favour stored credentials.
A2A gains the most ground in markets with strong open banking infrastructure and real-time rails already in place, particularly across Scandinavia and parts of Eastern Europe.
Businesses expanding into those markets should expect A2A to already be a default expectation at checkout, not an emerging option.
What Businesses Should Do
Preparing for this shift comes down to a few concrete moves at the checkout level. None of them requires ripping out existing card infrastructure, just building around it.
- Build checkout infrastructure around multiple rails rather than routing everything through card-based wallets
- Make instant bank transfer a visible, native option instead of a buried alternative
- Track settlement speed alongside fees when comparing rail costs, since faster access to funds has its own financial value
Big Tech’s Wallet Monopoly Is Being Unbundled
For a decade, Apple Pay was the only way to tap an iPhone to pay in a store. That changed when the European Commission made Apple’s offer to open its NFC chip to third-party developers legally binding across the European Economic Area.
Banks Are Building Their Own Wallets
Wero, the pan-European wallet backed by the European Payments Initiative, has already attracted more than 40 million registered users across Germany, France, and Belgium since its 2024 launch, with in-store NFC payments planned to roll out through 2026.
The German Banks, that include Volksbank and Raiffeisenbank are independently converting their own banking applications into iPhone wallets, allowing customers to swipe and pay without the need to even open Apple Pay.
Commercial Relevance
Apple Pay fees have historically pulled hundreds of millions of euros a year out of European card issuers, and every transaction routed through an OS wallet hands the underlying transaction data and customer relationship to Apple or Google instead of the bank.
Institutions that build their own NFC-enabled experience keep both the fee and the relationship. The same logic applies outside banking too.
Point of sale systems and checkout software now need to support a growing list of wallet providers, not just the two that dominated the last decade of mobile payments.
Wallets Are Becoming Identity Hubs, Not Just Payment Tools
Digital wallets are absorbing far more than card credentials.
Government ID, driving licenses, age verification, and loyalty programs are consolidating into the same interface that already stores a customer’s payment method.
The eIDAS 2.0 Mandate
EU member states have to ensure that their citizens receive a European Digital Identity Wallet with the capability of storing verifiable credentials by the end of 2026. The wallet is then expected to be accepted by financial institutions for customer authentication shortly after.
That mandate is one reason the global digital identity market is forecast to grow from roughly 75 billion dollars in 2026 to nearly 169 billion dollars by 2031.
What This Means for Checkout Design
A single authorisation step should be able to confirm identity, verify age where required, and process payment, rather than routing a customer through separate KYC and payment flows. Businesses that consolidate this first will see it reflected directly in conversion rates.
Buy now, pay later is following a similar path, moving out of standalone apps and directly into wallets and bank-native payment flows.
Loyalty programs are converging into the same layer too, since a wallet that already knows a customer’s identity and payment preference is a natural place to surface personalised offers.
Regional Networks Are Outpacing the Global Duopoly
Apple Pay and Google Pay still dominate headlines, but a large share of volume growth is happening elsewhere.
Worldpay’s latest Global Payments Report found that digital wallet spending has already overtaken card spending in Hong Kong, and that wallets now account for 77 percent of online spend across Asia Pacific as a whole.
Asia’s Wallet Landscape Is Not One Model
That growth is not evenly distributed by wallet type.
India and Thailand lean heavily on account-to-account rails, Hong Kong and Singapore remain largely card-funded, and Indonesia and Malaysia are increasingly shaped by super apps.
Brazil’s Pix and India’s UPI continue taking checkout share from card networks in their home markets, and interconnected real-time systems like Singapore’s PayNow, Thailand’s PromptPay, and Malaysia’s DuitNow are starting to enable low-cost cross-border transfers outside the card rails entirely.
What This Means for Cross-Border Businesses
Selling across multiple markets means the wallet strategy that works at home will not automatically work abroad. Three implications matter most.
- Conversion drops quickly in markets where the locally dominant wallet is missing from checkout
- A single global wallet strategy will consistently underperform against localised payment options
- Interconnected regional real-time networks are gradually reducing the cost advantage card networks have held on cross-border settlement
Localising payment options by geography, rather than defaulting to one wallet setup worldwide, is becoming a conversion lever as much as a compliance requirement.
What This Means Beyond the Payments Stack
None of this fragmentation is purely a technical or margin story. Lower-cost A2A rails extend digital commerce access to unbanked and underbanked populations who never had a credit line to begin with, and merchants freed from card interchange keep more margin without needing to raise prices to offset it.
Consumers gain something too, since a bank-owned or regionally issued wallet keeps spending data inside a relationship the customer already trusts, rather than routing it through a third party with its own commercial incentives.
The businesses that come out ahead in this next phase will not be the ones with the flashiest wallet integration on launch day. They will be the ones that treat payments infrastructure as something to own and diversify. The wallet on a customer’s phone is no longer just a payment method.
It is quickly becoming the interface where identity, credit, loyalty, and trust all get decided, and the businesses that show up inside it on their own terms will set the pace for the next decade of digital commerce.
Author Bio:
Deepak Shukla is the founder and CEO of Pearl Lemon Accountants, part of the Pearl Lemon Group. He works at the intersection of finance and AI, building tools and processes that make accounting, tax and compliance faster and more accurate for businesses across the UK, US and Europe. Under his leadership, Pearl Lemon Accountants has grown into a full-service practice supporting finance teams and CFOs with cross-border accounting, tax planning and financial compliance.
