There has been a lot of focus on Millennials over the last several years. And, it’s easy to understand why. Millennials represent the largest generation in the United States, they are hyper-connected and are disrupting numerous industries -- specifically the banking and financial world.
Between being more frugal, skeptical, environmentally conscious, and tech-savvy, Millennials are drastically changing the payments industry. As a whole, Millennials are even changing to their favorite ways to get paid.
Traditional Payments Are Still Alive and Kicking
Despite the various payment options that are available, traditional payment options are still popular among Millennials. Surprisingly, 58 percent of Millennials still preferred to get paid with cash. Exchanging cash is easy, convenient, and secure. Additionally, cash is accepted everywhere, prevents spontaneous spending, and there are no transaction or processing fees.
Besides cash, traditional payment options, like checks and credit cards, are still being used daily by Millennials. In fact, 87 percent of Millennials have written a check within the last three months and 84 percent use credit or debit cards to make purchases. Another 45 percent receive their salary via bank transfer.
However, 6 in 10 Millennials don’t have a credit card and prefer debit cards “because they have many of the same benefits over hard cash as credit — they eliminate the need for a trip to the ATM and it can quickly be replaced if a wallet is stolen” and, most importantly, because they dislike debt.
Mobile Payments On the Rise
While traditional payment options like cash are still popular among Millennials, the second preferred payment option with 26 percent are payment apps like Venmo, PayPal, Google Wallet, and Square Wallet. These P2P payment apps offer a free way to transfer funds and are extremely convenient.
Instead, meeting someone in-person or going to a bank, money can be transferred to anyone in the world in real-time. Furthermore, many of these services come with features that allow Millennials to track their spending so that they can stay within their budget or split bills with friends or family members.
For starters, 98 percent of Millennials use a smartphone, with 97 percent also on social media. In short, smartphones and social media have become an integral part of their daily lives. Because of this, they’re comfortable with using their mobile devices to send and receive payments.
They also enjoy its convenience since these apps connect to their bank accounts and allow them to pay each other instantly with the app with just a click of a button.
“These new developments have been designed with smartphones as the focal point and the main aim is to make lives easier for consumers,” writes Jonathan Vaux, Executive Director of Innovation Partnerships, Visa Europe Collab. “With mobile payment apps, payments can be conducted anywhere on a mobile device, taking away the pain of waiting in a traditional checkout line. Likewise, biometric authentication allows for a much simpler, faster and more secure payment, without the need for consumers to remember their PIN and passwords.”
Additionally, data from the Digital Payment survey of Europe found that Millennials “do indeed interact with mobile and banking apps much more readily than older age groups.”
- More than half of European millennials (54 percent) use mobile digital payments, compared with just 44 percent of the general public.
- Millennials use digital payments for everyday essentials more than other generations, too – paying bills (47 percent vs. an average of 40 percent); transferring money to friends and family (56 percent vs average of 45 percent), and interacting with their banks (68 percent vs. 62 percent).
- Four in five millennials would be interested in seeing new forms of digital payments offered in future, compared with 67 percent of the general population.
Because of these benefits, Accenture is predicting that digital payments will become the most preferred payment option by 2020.
The Bottom Line
Millennials are embracing digital payments more than any other generation because of the comfort and convenience. In fact, they’re the driving force behind making a cashless society. They prefer ecash.
However, Millennials still accept traditional forms of payments like cash and checks because they remain as convenient and secure forms of payments.
Until Millennials completely trust mobile and digital payments, and the payments occur in real-time, we’ll still live in a world where paper payments are still a preferred payment option.