The millennial generation is increasingly relying on digital services for payment. For instance, paying for a coffee using a contactless card, transferring money to someone through mobile banking or buying products online with “one-click” is becoming the norm. Millennials have not only boosted the payments revolution but are currently equally playing a critical role in the development of new payment technologies.
What is the role being played by Millennials in the payment industry?
Millennials- the generation defined as being born between 1981 and 2000- do not have the same payment habits. The generation is divided into two distinct categories where the oldest generation is at the peak of its economic productivity and strongest purchasing power, while the youngest are at the initial stages of development with regards to their purchasing habits.
The younger part of this demography heavily relies on technology for rapid and convenient solutions that can empower them. In this sense, smartphones have positioned themselves as a key enabler playing a vital role in the evolution of payment choice. Statistics are clearly indicating that mobile phones are becoming increasingly prerequisite: in the UK, 46% of Millennials use an iPhone while 71% of Millennials in Italy affirm not to be able to survive without a smartphone (Vocalink’s research).
How payment is split in a day in a typical young Millennial’s life
A large part of younger Millennials is known to work at coffee houses to help pay the bills, student loans, and other expenses. 45% of students have a part-time job while one third works part-time during term time. They generally opt for early morning shifts.
The large majority has their weekly salary transferred directly to their bank account. For example, 88% of British Millennials receive their salary in this manner. Nonetheless, an increasing number of European Millennials are embracing alternate modes of payment and the need to hold their money in a mobile wallet.
Another habit that has been observed among British Millennials is going to the bank before the start of class to deposit a cheque. The reason behind is the fact that about 20% of this generation receive monetary gifts or loans in the form of a cheque.
Millennials, however, are not happy to lose time queuing in a bank or waiting for several days before the cheque is cleared. Service providers are hence developing a cheque imaging technology to respond to the needs of this large generation. Through an image clearing system, funds may be available the very next day. This system is expected to be available soon.
The trend differs in the US where cheques are part and parcel of the everyday life of Millennials. 70% of them continue to use cheques, according to Vocalink. In the Netherlands, only 6% of Millennials write cheques while in Italy, more than 25% do so.
Most Millennials use contactless cards for traveling. In the UK, this system is widespread. Contactless payment is also used to buy lunch. If for smaller items, Millennials in the UK tend to use cards, other Europeans use cash. In Germany, for instance, 70% of Millennials buy groceries with cash.
It has been demonstrated that Millennials are also avid users of mobile payment when it comes to buying tickets online or even paying the dentist. The mobile number becomes the unique identifier of the user and there is no requirement for massive input of personal payment data.
There is still the need to eliminate confusion
If one in four UK Millennials is comfortable with mobile payments, such is not the case in other European countries where mobile payment still has room for improvement. In Italy, 10% of Millennials are favorable to mobile payment while in Germany, the generation is reticent. In the US, 26% of Millennials are using mobile payments and emerging payment technologies. In Thailand, on the other hand, payment methods are drastically being simplified and users can simply use their 13-digit ID number to authorize money transfers and bill payments.
Even if the millennial generation is showing a great potential in revolutionizing the whole payment system, a large part is still expressing confusion and security fears regarding certain innovative payment methods. Industry leaders should hence consider creating better awareness to allay fears over new security features such as voice recognition, eye scans, and fingerprints amongst others. The key to seducing them remains, after all, in offering them flexibility, rapidity, and convenience coupled with high level of security.
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