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Millennials are open to new forms of payment: report

September 12, 2014

As brands and retailers explore the opportunity with mobile wallets, consideration should be given to how they can be used to gain the attention of millennials, who have careful spending habits and technologically inclined mindsets. 

According to a recent report by, 63 percent of millennials do not own a credit card. While technology is already ingrained in millennials, they are likely already drawn to mobile wallet solutions.

“This research clearly shows that millennials are open to using new forms of payment, which means they will be willing to use a mobile wallet,” said Alex Campbell, co-founder of Vibes, Chicago. “Preference by millennials to use debit cards over credit cards doesn’t really affect mobile wallets, as debit cards will work with Apple Pay as well as Google Wallet.

“If anything, millennials using debit cards shows that this generation is acutely aware of and willing to embrace financial tools that can help them be better spenders.  Millennials are open and willing to use new forms of payment, which bodes very well for the mobile wallet.”

Young spending
The survey, completed by Princeton Survey Research Associates International (PSRAI), comparatively found that only 35 percent of adults, who are 30 and older, do not have credit cards in their wallets.

Millennials are the least likely of any age group to pay their balances in full each month, and only 40 percent of this demographic pay their entire balance each month, compared to 53 percent of adults who are 30 and older.

A small three percent of millennials admit to often missing payments completely, which is more than any other age group included in the survey.

While the survey is telling of credit scores, it could be argued that millennials do not want to enter the realm of credit spending due to the stereotypical irresponsibility that is attached to it.

While they are upheld by strict legislation to be approved for certain credit cards, they may be more likely to try mobile wallets for more responsible spending and to be a part of the tech-savvy space that mobile wallets reside in.

Given Apple’s recent release of Apple Pay, brands and retailers could seize the opportunity to target these young spenders, who are opting for more secure and responsible ways of transaction.

“Brands and retailers have a real, possibly once in a lifetime, opportunity to connect directly with consumers all along the customer journey using mobile wallet marketing,” Mr. Campbell said. “Since the beginning of marketing, brands have tried to get closer and closer to the purchase decision and now using mobile wallet marketing they can influence multiple stages of the customer journey.”

Game changer
Apple’s recent announcement regarding Apple Pay will likely change the overall perception of mobile wallets. Up until now, consumers have been skeptical of the need for mobile wallets.

China’s ecommerce sectors have continued to show that mobile wallet systems can be successful, according to data from Forrester Research.

While digital wallets have been established in China for some time, businesses in other countries can also find success by evaluating the needs of consumers and options within the marketplace to formulate a similar strategy. As the country’s ecommerce continues to boom, research points to the unique characteristics of China’s mobile payment system (see story).

Savvy merchants such as OpenTable and SeaWorld have been overcoming the challenge of getting consumers to adopt a mobile wallet by offering points or differentiated rewards only available for mobile wallet users.

In the United States as well as other markets, mobile wallets have yet to take off in a meaningful manner, mainly because the wallet providers are struggling to create added value that appeals to customers against traditional payment schemes like credit cards. Also, companies in the U.S. have been slow to assemble a critical mass of participants across the mobile wallet ecosystem to make the wallets a real consumer alternative (see story).

Given the report, speculations can be made regarding millennials’ decision, or lack there of, to own credit cards, and mobile wallets are entering the tech space at a convenient time.

Brands and retailers offering mobile wallet solutions can still effectively target this demographic due to debit card compatibility.

“Just like with ecommerce, consumers can use their debit cards just as they could a credit card,” said Nathalie Reinelt, analyst at the Aite Group, Phoenix. “The core issue consumers will face if they forego credit cards has nothing to do with online, in-store, or mobile commerce.

“The primary issue is that they will not be able to establish a strong enough credit score for long term purchasing power, such as a home or a car.”

Final Take
Caitlyn Bohannon is an editorial assistant on Mobile Commerce Daily, New York

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