Last year will be remembered as pivotal in the evolution of mobile payments. In 2018, mobile transactions set new records for every US holiday shopping season. Consumers are using less cash and shopping on their phones more. American shoppers have begun to use a mobile phone-based digital wallet to make transactions, especially with friends and family that live in other states or countries.

A digital or e-wallet is somewhat like a gift card: users place an amount of money into accounts stored on a phone that they can access and then spend as desired. When used like a bank account transactions are identical to any other debit or credit, only the transactions go directly from the e-wallet rather than from a debit or credit card.

With global e-wallet transactions expected to reach $2.1trn by 2023 from $594bn in 2016, technology giants are muscling for market share.

A pioneer in e-wallets, Paypal was founded in 1998, making it the oldest offering. Google Wallet was released in 2011, and Apple Pay launched in 2014.

Paypal has grown through acquisitions and partnerships since splitting from parent eBay in 2015. Google Wallet began rebranding to Google Pay in 2018 to rival Apple pay. The Silicon Valley technology giant has continued to ink partnership deals with apps including Airbnb, Kayak and DoorDash while tweaking its website to facilitate greater adoption.

Apple Pay has been making inroads with consumers and merchants alike. A 2017 report found that 48% of merchants thought favorably about the e-wallet. Another 39% planned to add the option in 2018, the same report revealed.

Virtual wallet adoption in the rest of the world has been skyrocketing, mainly because debit and credit cards have almost universal acceptance with merchants and customers. With this in mind, Google and Apple are both furiously innovating US versions digital offerings, in order to highlight a clear and distinct advantage that plastic cards don’t offer.

Interestingly enough, the rest of the world isn’t so challenged.

Digital wallets in countries outside of the US have bypassed the sole ‘money storage’ single use function, by also providing users with e-Commerce options that give consumers an entire financial and shopping ecosystem. Internationally embraced wallets allow consumers to: buy and sell 1000’s of items, transfer monies between friends, buy and send gift certificates, apply for a debit card and even buy gold or silver.

Leaders in the overseas market including Alipay (China), ICICIBank (India) and Passfeed, Inc. in the US have disrupted banking by driving customers to their digital wallets by creating total shopping experiences.

One of the strongest drivers of the US digital payment growth is Alipay. The Alipay e-wallet recently signed an agreement with payment processor Vantiv to allow Walgreens pharmacies to accommodate digital wallet transactions. Emerging players like Passfeed (a New York City based upstart) have also disrupted the US market with an e-Commerce based iPhone App — eyeing the multi-billion dollar US mobile payments market.

"US investors cannot ignore the trend toward digital payment", Richard Wang, CEO of Passfeed said.

"The explosion of the US mobile payment market, makes it a very attractive place to be now and into the future," he explained. "By 2020, 90% of smartphone users in the United States will have used some form of mobile payments — we would be very happy to take 1% of that market.

Whether American Express, MasterCard and Visa likes it or not, the digital wallet revolution has transformed how consumers buy and retailers sell. Just like 1998, when the internet started to reshape how the world communicates, 2019 is starting to look like the year when a new era of shopping is taking off.