With the advent of technology, the younger generations and their methods of choice are certainly forcing countless industries to evolve with the times. The massive industry of payment processing is no exception.
Paper money is almost eliminated already, but with the increased usage of mobile payment apps and other credit card alternatives, it seems like “plastic” spending is also dying. So, how do these trends relate to Millennials and Gen-Z consumers?
The Growing Use of Mobile Payments
According to a study held by Payments Industry Intelligence, In 2017, it was estimated that over 87 million people were already signed up to and set up for Apple Pay alone. Another 34 million use Samsung Pay. Of course, China’s own mobile payment apps have all domestic competitors beat with nearly 1 billion users across their two major services known as WeChat Pay and Alipay.
Among these early adopters of mobile pay technology, the majority fall into the 18-34 age bracket. In fact, almost “half of the smartphone users in this demographic have a mobile wallet” as stated by Payments Industry Intelligence. Nearly a third of them say they’re interested in mobile payment technology.
The Mercator Advisory Group’s CustomerMonitor Survey Series looked at usage among millennials specifically and found that as many as 70% of them use their mobile phones to pay for goods and services. Of them, 40% use mobile payment apps like Apple Pay or the growing option, Google Pay.
With these numbers in mind, it’s no surprise that the market value for mobile payment technology is rapidly rising. According to Zion Market Research, “the global mobile payment technology market was valued at around $123.5 billion in 2017 and is expected to reach approximately $3,371.6 billion by 2024.”
How Merchants Are Responding
With many mobile apps meaning reduced processing fees over credit card payments, merchants have been quick to jump on board. That’s no surprise considering that Bloomberg reported credit card swipes cost merchants over $90 billion in fees annually.
Bloomberg.com writes, “While shoppers have largely shunned mobile payments offered by third-party providers like Apple Inc., retailers are trying to persuade customers to embrace the technology by dangling discounts and other perks.” The merchants they speak of include Walmart and Starbucks, both of whom have worked mobile pay into their loyalty programs.
In all, more than 1 million merchants already accept Apple Pay, including gas stations and restaurants according to a study by MacRumors.com. At the start of the year, it was announced that over 65% of retailers in the United States were accepting it as a payment method.
Meanwhile, Google Pay isn’t far behind. At launch in 2015, over 700,000 merchants reportedly accepted Google Pay with seven out of ten Android devices being payment ready.
As of today, adoption of mobile payment technology is growing–especially among Millennials and Gen-Z consumers–but it still has major adoption ahead if it’s going to see the success that it has in other countries, like China.”