Although physical card production remains huge globally, a growing share of everyday spend is being routed through virtual cards, wallet tokens, and mobile wallets such as Apple Pay and Google Pay – especially for e-commerce, subscriptions, travel, and corporate spend. Even for in-store payments, the physical plastic card is less likely to be taken out of a consumer’s wallet than a mobile phone for a contactless payment.

According to analysis conducted by Edgar, Dunn & Company (EDC), virtual card transactions have increased in the last 10 years from a few transactions per year per consumer, to around 260 transactions. EDC specifically noted that card provisioning into Apple Pay (launched 2014) and Google Pay (originally launched 2011) has significantly accelerated this growth. This analysis was conducted by examining data for both online and offline transactions for 14 of the most mature card-using countries around the world, including the US, Canada, the UK, France, Germany, Italy, the Nordics, Australia, South Korea, Singapore, etc.

Consumers increasingly keep their payment card “on file” in a wallet, then pay via the wallet token rather than the physical card number for e-commerce. For in-store payments, contactless is the leading consumer behaviour, whether that tap comes from a physical card or a phone/watch wallet. Mobile wallets are very strong in some markets and segments, especially where wallet acceptance and consumer familiarity are high; for example, in the US, there is major wallet penetration, with Apple Pay often leading, and in India, where Google Pay is especially strong. This is partially explained by the penetration of the Apple Phone relative to Android payment phones, whilst many of the emerging markets have seen greater adoption of Android devices.

It was 2018 when Google merged Android Pay and Google Wallet into one unified brand called Google Pay. The analysis conducted by EDC found that usage of cardless, virtual-wallet transactions grew at a 55% CAGR over the same ten-year period. That is an astounding growth rate for any financial product. This is not just steady growth, it is a "land grab" by the virtual card. This implies the product has moved from a niche experiment to the dominant standard, effectively replacing the old standard. The more that consumers experience payments as invisible, embedded, and one-tap, the less important the physical card form factor becomes in day-to-day life. For digital wallets, this represents the shift from a tech-savvy enthusiast usage to a global daily routine.

Open Loop Transit Systems

Urban transit has been a major driver of the shift from physical cards to mobile wallets, especially where tap-and-go becomes the default way to pay fares. Transit is one of the most frequent, low-friction payment use cases, meaning when travellers can tap a phone instead of carrying a card, the habit forms quickly. This behaviour then translates into the store.

Once a city or network supports open-loop contactless payments broadly, travellers often move to whatever is most convenient at the ticket barrier, gate or on the bus, and that increasingly includes Apple Pay, Google Pay, and other mobile wallets. After a few weeks of tapping in and out with a phone or watch, reaching for a plastic card at the point of sale starts to feel like unnecessary friction.

Food delivery and taxi hailing

Merchant apps like Uber Eats, Deliveroo, Just Eat, Wolt, and Grab, using card-on-file plus wallet-based checkout, are a major convenience driver for consumers because they remove the need to re-enter card details every time. The core consumer benefit is speed; no one wants to type a 16-digit card number, expiry date, and security code for a simple repeat order of your favourite spicy Indian dish.

Merchant wallets and tokenised card-on-file setups feel safer to many consumers compared with repeatedly typing card details into multiple apps. Speed becomes the default expectation. Consumers increasingly expect payments to disappear into the background – just as we have seen when you take an Uber. It’s about the journey, the safety, and the convenience – it is not about the payment. Consumers often switch to a competitor that makes payment feel invisible. In merchant apps, payment is tied more to repeat habitual ordering, so consumers are even more focused on avoiding card re-entry for recurring takeaways, grocery top-ups, and same-day deliveries. Once a consumer has experienced frictionless, one-tap checkouts in a few apps, it raises the bar for every other merchant.

What this means for retail merchants

Consumers become less tolerant of slow, card-dip or cash-only experiences once they are used to tap-to-pay in urban transit. If you are selling to consumers in a market with high Apple iPhone penetration, prioritising Apple Pay support is essential. If your customer base is more Android-heavy, Google Pay support is equally important and can be a major driver in checkout conversion.

In practice, merchants should treat them as part of a mobile wallet acceptance strategy rather than as two isolated products. Mobile wallet acceptance becomes a baseline for many merchants. If customers are using Apple Pay or Google Pay on the commute, they expect those wallets to work everywhere else too - both online and in-store. The consumer using a “card on file” wallet in a merchant’s app, such as food delivery, expects those same wallets to work across different channels.

Retail merchants sit in the middle of the payment shift. They still need to accept physical cards, but they are increasingly expected to support mobile wallets, contactless, BNPL, A2A, and a better checkout experience overall. For many retailers, conversion and basket size become linked to payment choice. If a preferred method is missing, customers may abandon the purchase or look elsewhere. Of the 14 largest retailers in the UK – representing over 90% of the UK’s consumer spend, from grocery through to fashion and from furniture to consumer electronics – 100% of their merchant-branded apps support Apple Pay and Google Pay. True, this may be a small sample from a global perspective of merchant-branded apps, but it is indicative of the trend to accept mobile wallets on merchant apps.

Is this the end of physical payment card?

Physical payment cards will not disappear entirely, even in a digital-first future. They will likely become a fallback option alongside mobile wallets, wearables and biometrics, persisting for decades due to reliability, inclusion, and the need for a backup. Digital issuance of payment credentials is likely to become the norm, with virtual cards provisioned instantly to mobile wallets, whilst physical cards increasingly become optional or offered as a paid add-on.

Physical cards are not expected to follow the paper cheque (or "check" for our US readers). Paper cheques are vastly reduced, zero in many countries, but never zero from a global perspective. Payment networks and issuers keep them for compliance, fraud-proofing high-value transactions, and serving the 10-20% who always will need/want them. Similarly, physical cards will remain important for certain demographics, for offline or low-connectivity environments, for cross-border travel in markets where wallet acceptance is patchy, and as a visible symbol of a relationship for some premium segments.

The industry anticipates physical cards will likely become optional by around 2030-2035 in most developed markets, shifting to a digital-first issuance model where consumers request a physical card explicitly. Interestingly, Mastercard and Visa are planning to eliminate the visible card account number on the front (or even the back) of the card by around 2028/2033. The magstripe is expected to be completely sunset by 2033. By 2040, it is also expected that tokenised credentials will dominate the consumer payments market. The physical payment card will be considered a luxury – or at least an optional extra, but not essential. Think back to the last time you walked out the door without a physical card, yet still managed to navigate your commute, buy lunch, and finish the grocery shopping using only your mobile device. The future is arriving one tap at a time.

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The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).