What Millennials Mean for the Future of Payment Technology
What do Millenials mean for the future of payment technology in your business? In a word, change. According to a study by JWT, The Future of Payments and Currency,
70 percent of Millennials believe the way we pay for things will be totally different in five years—and they’re the ones leading the way.
A New Generation
First, consider this: There are some 80 million Millennials in the U.S., according to Census data. This generation is larger than the Baby Boomers—and you know what an effect they had! Overall, Millennials make up 27 percent of the U.S. population.
Next, consider that Millennials grew up online. They’re used to doing everything on their devices, from looking up directions and texting to, yes, banking. According to a FICO report, 80 percent of Millennials do their basic banking activities online—a far higher percentage than other demographics. Eighty percent check their balances online, 76 percent check for fraud online and 65 percent transfer money online.
Finally, consider this: Millennials’ attitudes toward finances are surprisingly conservative. A study by Bankrate reports 63 percent of those ages 18 to 29 don’t have a credit card. Concerned about debt due to high college costs and seeing their parents struggle during the Great Recession, Millennials are debt-averse and like dealing in cash.
Convenience Plus Caution
Millennials’ credit caution doesn’t mean they carry paper money, however. Millennials are sparking a rise in the use of reloadable, prepaid debit cards. One-third of Americans 18-34 years old have used this type of debit card, compared to one-fourth of all Americans, according to a survey from TD Bank, and 60 percent of Millennials would consider using one, vs. 50 percent of the overall population.
They also rely heavily on peer-to-peer (P2P) payment apps such as Venmo and PopMoney. These apps connect directly to users’ bank accounts and enable them to pay each other instantly with the app. It’s perfect for Millennials, offering convenience and control and fitting their social, group-oriented lifestyle.
What Do They Want?
What about the future of digital and mobile payments? Here’s what Millennials want to see, according to JWT:
- 44 percent would prefer to use their phones instead of cash to pay for small items.
- 62 percent are comfortable with the idea of connecting their payment information to retailer apps in order to speed payment, and 45 percent are comfortable with the idea of connecting their payment information to wearable devices to speed payment.
- The top features Millennials want from mobile payments are speed (cited by 50 percent), the ability to split payments with friends (45 percent) and the ability to keep better track of purchases (52 percent).
What Does It Mean to You?
Already, Nielsen reports, 55 percent of mobile payments are made by smartphone users ages 18 to 34. If your business is one that typically accepts a lot of cash—such as a retailer, restaurant or bar—you need to get ready for mobile payments if you haven’t yet done so.
Half of Millennials are already using or would consider nontraditional payment options like PayPal or Venmo in the next 12 months, compared to just 27 percent of those over 50. And nearly one-third (32 percent) of Millennial respondents are likely to use mobile wallet services like Apple Pay or Google Wallet in the next 12 months, compared to just 16 percent of those 35 and older.
Use of mobile and digital payments will continue to grow for several reasons:
- The older edge of the Millennial generation is coming into its prime money-earning years. They are not going to start writing checks just because they’re getting married and settling down.
- Millennials are highly influential—and easily influenced by their peers. Already, acceptance of apps such as Venmo has been driven primarily by word-of-mouth recommendations from one Millennial to another.
- Millennials are already proving they’re comfortable with P2P payments, so it’s a short leap from there to wider adoption of a wide variety of smartphone-based payments.
- Millennials tend to be early adopters. As new technology like Apple Watch and Apple Pay rollout, this generation will be first in line to use it as a payment tool when the option becomes available.