Are Millennials and Gen-Z Ditching Credit Cards for Mobile Payment Apps?

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. 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 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.”


Stricter Visa Rules for Trial Offers and Promotions To Take Effect Next Year

The card networks’ crackdown on negative-option billing and subscriptions with free trials is continuing, with stricter policies from Visa Inc. set to take effect April 18.

The updated Visa rules will follow by a year tightened rules from Mastercard Inc. on negative-option billers. These are billers who, after getting a consumer to sign up for a trial subscription for a product, automatically charge the customer’s card on file after the trial ends or until the consumer cancels. Mastercard’s rule change requires merchants to gain cardholder approval at the end of the trial before they start billing. Merchants also must send the cardholder, either by email or text message, the transaction amount, payment date, and merchant name along with clear instructions on how to cancel.

Mark Standfield, president of Midigator LLC, an American Fork, Utah-based firm that works with merchants and merchant acquirers to prevent and mitigate chargebacks, tells Digital Transactions News that Visa’s upcoming changes are largely similar to Mastercard’s, though there are some differences. Visa’s rule will cover physical and digital goods sold through subscriptions, whereas Mastercard’s covers only physical goods, he says.

“The biggest difference that we saw is that Visa included digital merchants, not just physical merchants,” Standfield says.

Visa posted a notice about its planned changes on a Web site it maintains for merchants. The post notes Visa has had rules to regulate negative-option and subscription merchants since 2011. The notice identifies several “pain points” in promotions and introductory offers, including cardholder complaints and confusion when customers forget or did not understand that they had signed up for a subscription, the lack of a mechanism to distinguish transactions involving promotional or trial offers from any other subscription, and a lack of card-issuer clarity on available dispute rights.

“To enable greater customer recognition, easier cancellation, and clearer dispute rights, Visa is updating its rules related to transactions at merchants that offer free trials or introductory offers as part of an ongoing subscription service,” the post says. It later adds that “upon further review of its existing rules, Visa recognizes that free trials or introductory offers that roll into ongoing subscriptions or recurring charges can lead to problems for cardholders and clients, including multimillion-dollar operational cost increases due to high call-center volumes, customer complaints, write-offs and card closures/re-issuances.”

A Visa spokesperson declined to comment for this story.

Despite a card-network crackdown on subscription billers about a decade ago, problems have persisted and led to enforcement actions by the Federal Trade Commission and state attorneys general. That’s put more pressure on acquirers and the networks, according to Standfield. “When events like that occur it triggers an escalated response by the brands,” he says.

Alpharetta, Ga.-based acquirer Priority Technology Holdings Inc. earlier this year said it had closed 1,200 merchant accounts in order to comply with the new Mastercard rule. The processor’s problems came to light mainly because Priority is a publicly traded company; Standfield says other acquirers have encountered similar issues. “Due to their private status they largely stay off the radar,” he says.

Top Payment Processing Trends Making Waves in 2019

Running a successful business requires succeeding at a number of important steps. For starters, you need to pick the right product or service to provide. You also need to have the right marketing and advertising strategies in place to get the word out about your offerings.

Then there’s the all-important matter of getting paid. Decades ago, setting up the payment side of things was as simple as purchasing a cash register and writing up receipts.  But it’s 2019, and we’re past the point when a simple cash register will do. There are more players and devices in the space and shoppers are increasingly adopting alternative payment methods to fit their lifestyles.

This year, we can expect some pretty exciting trends to shake up payment processing. Here are the top five we’re seeing:

Mobile payment adoption will continue to grow

Back in 2014, Apple introduced a much larger audience to the mobile wallet market. It wasn’t long before a number of other big names – including the likes of Google, Chase, and Samsung – followed suit. By 2015, there were nearly a dozen mobile-wallet platforms from which businesses could choose.

By 2017, 39% of U.S. consumers were already using smart wallets. And today, 10% of Millennialsreport using mobile wallets to make all of their payments and adoption is growing with other demographics, as well.

Some experts even believe mobile wallets will become one of the most important features consumers consider when buying smartphones.

This helps explain why mobile payment volume is expected to reach $503 billion by 2020. With just a year to go, it’s probably safe to assume that more and more customers will be taking out their phones at the cash register.

That’s why if you’re not considering mobile payments yet, it may be time to look into the technology. Do a bit of research into where your customers stand with mobile payments. Survey your shoppers to get their take on Apple Pay and other solutions. If you know other merchants that are accepting mobile payments, talk to them to see how things are working out.

Then once you’re willing to move forward, talk to your payment provider and inquire about their mobile payment solutions.

“Buy now, pay later” will become more popular

Modern consumers (particularly Millennials and Gen Z) are rapidly gravitating towards alternative payment methods.

One example? “buy now, pay later.” It’s a service that allows shoppers to immediately take home their purchase while paying for their products over a number of installments. “Buy now, pay later” has proven to be a boon for merchants (especially retailers) and consumers alike.

As retail expert Shelley Kohan notes:

With buy-now, wear-now, pay-later, the customer takes the product with them at the point of transaction and e-com goods are sent at the transaction point. The big win for retailers is they don’t have to figure out where to store layaway goods, deal with customers who change their minds and handle the mound of abandoned product.

As retailers and brands desire to capture the hearts, minds and wallets of millennial and Gen Z generations, understanding what drives their decision-making is critical. Connecting through a social cause, giving a voice in the development of a product and empowering customers with alternative interest-free payments that are convenient and simple to use are touchstones that resonate with the next gen.

What does this mean for you? If you’re a retailer selling high-ticket items, it may behoove to look into payment options such as “buy now, pay later.”

Remember, consumers want more flexibility with their payment options, and that’s not going to change anytime soon. If you’re unable to serve them in the ways that fit their lifestyle, they will likely turn to your competitors.

Zelle is moving right past Venmo

While Zelle and Venmo are primarily for peer-to-peer payments, it’s still a good idea to track trends in this space, as they may have some implications for your business.

Even though it debuted a decade ago, Venmo really only picked up steam over the past couple of years or so. People finally realized how easy it was to pay each other or split a bill in every cashless society.

Unfortunately, for Venmo, their rein didn’t last long. In just under a year, Zelle went from nonexistent toking of the payment-app-hill.

Like Venmo, it allows users to send money to someone else without using cash, wire transfers, or checks. So, what does Zelle bring to the table? In a sign that traditional financial institutions are finally “getting it”, Zelle was introduced by the country’s seven largest banks (Bank of America, Wells Fargo, JPMorgan, Capital One, US Bancorp, PNC, and BB&T).

That’s all well and good for consumers,  but if you’re an SMB, why should this make the list of emerging payment-processing trends for 2019?

Here’s the thing: Zelle may be eying a move that would introduce its services to small businesses, making it easy – and secure – for them to accept payments through the app. Once that happens, it’s likely that Zelle will explode in popularity.

Obviously, nothing is set in stone yet, but we highly recommend that you watch this space. You want to be prepared from when either Zeller or Venmo decides to make bigger moves towards the SMB space.  

Payment security systems continue to evolve

As we just touched on, security is always a concern when it comes to disruptive technology.

However, security measures can be a disruption in and of themselves, too.

One example to look for in 2019 is biometric authentication (e.g. using fingerprint IDs to validate transactions).

While the idea may seem a bit far-fetched to some, it’s estimated that biometric authentication will support over 18 billion payments by 2021. That will mean a noticeable expansion of the technology – and perhaps even consumer demand for it – in 2019.

Keep an eye out for this trend — as well as other security issues — in the coming months. As we mentioned before, falling victim to fraud doesn’t just damage your finances, it erodes customer trust and could kill your reputation.

Acting on these important trends

Though adopting some of these trends may represent a major change to your company’s current operations, there’s still plenty of time to start the process. Pick one of the five above and then take the first step toward keeping up.