Online shoppers are increasingly leaving their credit cards in their wallets when it comes time to pay, as the convenience of digital wallets lures Australians.

A report by financial technology company FIS found in 2022, digital wallets overtook credit cards to become the leading online payment method in Australia for the first time.

Digital wallets accounted for 31 per cent of e-commerce market share, compared to credit cards, which had 28 per cent.

The growth is being led by Apple Pay, Google Wallet and PayPal – and experts believe they’re here to stay.

Bill Tsouvalas, managing director and CEO at Savvy, said digital wallets are now “ingrained in our culture”.

“When I was 20, we would still use cash but then the VISA debit card came out, and myself and then everyone I know just started to tap and go,” he said.

Now digital wallets are becoming the new norm, both in Australia and around the world.

The FIS report, which looked at 40 markets, found digital wallets account for 49 per cent of global e-commerce payment methods, and will increase their reach to 54 per cent by 2026.

Globally, digital wallet users surveyed preferred to fund their digital wallets directly from their bank accounts (34 per cent), than with debit cards (27 per cent) and credit cards (22 per cent).

PayPal is taking the lead in the digital wallet market in much of Europe, including Belgium, France and Germany.

But Steve Worthington, Swinburne University of Technology adjunct professor, said services like Apple Pay and Google Wallet are ripe for takeover.

PayPal saw user growth slow down over the last quarter, and he said services such as Apple Pay and Google Wallet have benefited by their association with mobile device brands, and associated multi-functionality with potential to add loyalty cards and ability to read QR codes for payments.

Safer to use online

Mr Tsouvalas said while he doesn’t see PayPal staying competitive against newer forms of digital wallets for consumers, it will likely continue to have a strong hold on business transactions.

“If you need to pay suppliers that are overseas and the like, I think that’s where PayPal will continue to be strong,” he said.

Digital wallets are also generally considered safer to use for online shopping as they add an extra layer of protection between your bank account details and prying eyes, Mr Tsouvalas said.

For example, when using Apple Pay to make a purchase, your card number is never stored on your device or Apple servers, and is never shared by Apple with merchants.

When using Google Pay, your data is also encrypted and your card number is not shared with merchants.

“The movement of money through digital wallets is just going to take away all the friction [in] sending payments that we’ve had historically,” Mr Tsouvalas said.