Millennials, the age group born between 1980-2000, currently dominate the workforce. Thus, they are the biggest consumers in the current market. Millennials are deemed trend-setters due to them redefining the payment method today. Their predecessors, boomers and baby boomers, often preferred cash method. However, millennials grew in the digital age. With that, they utilized the digital age to its maximum capacity, making way for perhaps the most significant and most diverse form of payment method today.
In the study conducted by Hitachi Consulting and the Bank Administration Institute (BAI), millennials proved to be open-minded regarding new payment methods. There are primary considerations taken in before trying in a certain payment method. According to the study, these considerations are:
- Ease of Use (35%)
- Financial Security (29%)
- Security and Safety (27%)
- Speed (20%)
The study also showed that ownership of credit cards is at an all-time low, at 56% in comparison to its predecessor generations. A credit card is connected to a credit score. Instead, millennials prefer debit cards, with over 80% of millennials owning debit cards.
A blog post by Unibul’s Money Blog stated that millennials believe that debit cards help manage finances compared to credit cards. Debit cards are still the way to pay for Person to Person (P2P) payment. On the other hand, credit cards are still a second choice when it comes to online purchases due to contactless payments such as Paypal.
Millennials account for 54% of online shopper demographics. A study by Card Knox predicted that millennials would pay $10 trillion in the United States alone. The study entitled “Payment Methods: History and Future” discussed that millennials rely on mobile-optimized websites. These mobile-optimized websites must offer various services like online stores, services, different subscriptions, paying bills and even playing mobile casinos, all those sites uses a large variety of payment methods in order to entice millennial consumers.
Here is a list of the most used payment methods by millennials:
1. Debit Card
A debit card is a bank card linked to your checking and savings account. Debit cards are used for transactions such as withdrawals, payments, and such. It replaces the need for a check or physical cash. Debit cards are preferred payment methods due to its lack of impact on credit score. Debit cards are linked to checking. Hence, when the checking doesn’t have money at all, the card bounces as a sign that there is not enough money for the transaction.
Debit cards help in keeping millennials in check with their budgets. Debit cards also present security due to the PIN needed to access it. The lack of physical cash is also a reason to avoid being robbed. Overall, debit cards are still undisputedly the most used payment method used by millennials.
2. Contactless Payment
Investopedia defines contactless payment as a tap and go. The purchase of service or products is through the use of smartcards, credit or debit cards, or devices such as phones. That is because these devices contain radio frequency identification (RFID) technology and near-field communication.
For debit, credit, and smartcards, the RFID technology has chip cards. These chip cards remove the need to swipe. Instead, you tap the device and then enter a PIN code. For devices such as phones and smartwatches, a downloadable app is connected to a card. Then, that account will be used for purchases.
The problem with contactless payment is that it is vulnerable to fraud and identity theft. However, since 2015, merchants and bank companies are now liable should any fraudulent activity take place.
It can also be frustrating for consumers if their mobile phones cannot handle the technology required to manipulate the app’s software.
Examples of contactless payment:
- Apple Pay– Apple Pay is a mobile payment and digital service wallet hybrid that enables apple users to make contactless payments. Supported by all Apple products, Apple Pay is widely used by users for payment methods. It is used to buy from the Apple store, other digital stores, and on the web.
- Google Pay– Google Pay and Google Wallet are contactless payments for android systems. Google pay allows its users to pay for services and services as in-app purchases or website purchases. Google Pay’s money remittance services only work in the United States and India.
- Samsung Pay– Samsung Pay is exclusive to Samsung users. It is a digital service that allows its users to store card information to use for online transactions.
PayPal is a big eCommerce site/online banking company that facilitates payment with both parties. PayPal works for both businesses and personal consumers. PayPal meets all the primary considerations that millennials look for when it comes to payment methods. First of all, PayPal is flexible. Second, when it comes to the transaction, the seller cannot access the user’s account and vice versa. When it comes to speed, PayPal is fast with the account to account. If it comes to withdrawing funds, it takes up to three to five business days for the money to reach the designated bank account.
Venmo is described as a peer-to-peer platform. What this means is that it is a mobile app that is anchored to a debit card. It allows people to send money easily. Venmo is becoming a favorite among millennials who work for the nonprofit industry due to the app’s convenience when it comes to sending money. As PayPal also owns it, there is no doubt that Venmo does not compromise on its security.
Over 17% of millennials invest in cryptocurrencies, and more of them use these financial technology startups as payment methods. Platforms such as blockchain and bitcoin top the list of cryptocurrencies used by millennials and even generation Y. Cryptocurrencies is a market that many fintech startups try to break into due to its great potential and large pool of prospective users.
The list above shows the top five most used payment methods by millennials. If it meets the main criteria, millennials will definitely try a new payment method.