The way we buy has changed immensely in recent years. Long gone are the days where purchasing only happens in-store with cash or credit. Now, shopping not only happens in brick and mortar stores but increasingly in the seemingly limitless online marketplace, complete with virtual shopping experiences, customer reviews and price comparisons. Then, when it’s time to actually buy, shoppers are presented with an increasing variety of payment options to choose from.
While much of this change is thanks to new technology, the growing influence of Millennials is also a factor. With collective purchasing power of over $2.45 trillion worldwide and growing, merchants cannot afford to ignore the experiences and preferences of this demographic. To do so risks limiting future growth.
The Mobile, Digitally Fluent Generation
Millennials have grown up with the Internet and are, accordingly, very comfortable in the digital world. Eighty-seven percent report that they use between two and three devices every single day so it’s understandable that Millennials are the most likely to shop and buy online, especially on mobile devices.
Add to this some of the major financial events of the last decade including the economic downturn in 2008, data breaches and a growing distrust in traditional financial institutions and Millennials have shown that they are especially willing to try payment methods that are more personalized, convenient, secure and cheaper when compared to cash and credit cards.
Banks at “the Highest Risk of Disruption”
In just 5 years, Millennials say they are expecting the payment industry will be completely changed with 33% thinking banks will be unnecessary and half expecting tech startups to “overhaul the way banks work.” According to the Millennial Disruption Index, “banks are at the highest risk of disruption” with tech companies making significant headway in becoming the new facilitators of the flow of money and creating mobile wallets.
With 85% of Millennial’s age 18–24 owning smartphones, tech companies are actively taking advantage of this mobile usage rate to refine their digital wallet. From eWallets to virtual currencies, payments are experiencing tremendous innovation and the influence and preferences of this digitally fluent generation has been and will continue to be huge.
What All This Change Means
It’s too early to tell which new payment methods are going to come out on top. But with online sales, especially mobile purchases, continuing to surge, merchants selling online will need to ensure their checkout is ready with the right options to effectively reach digitally fluent customers. This means you’ll need to accept more than just credit cards to be successful.