Millennials, they’re all the rage these days. And for good reason. It’s also anticipated that, by 2025, millennials will be the highest-earning generation in history. Furthermore, they have been pegged as the generation that is going to disrupt the entire banking industry.
This shouldn’t come as a shock. Back in 2012, Visa released a report entitled, Connecting with the Millennials, which found that a majority of this demographic believed in a cashless future. In fact, eight out of ten millennials reported that someday they will be able to do all of their shopping and pay their bills online, with 73 percent stating that this would be done through a mobile phone.
Since the release of that survey, digital wallets have not only become increasingly more popular and effective, but several countries like Singapore, the Netherlands, France, Sweden, Belgium, and Canada are also making serious headway towards a cashless society. But the question remains: Why are millennials so excited about a cashless future?
Digital transactions are clean, simple, and accurate
With cash, it’s more difficult to budget, monitor, and track your spending. And that’s a major sticking point for millennials. Twenty-six-year-old Sara McGrath told Bankrate that she uses a budgeting app to help keep tabs on her spending, “because of the budgeting software and because of having to really face up to my transactions, I know that I spend less when I’m using cards”.
McGrath adds, “When I have cash in my wallet, I’m like, ‘Yea! I can spend this on anything, and my budgeting program is not going to know about this.’” She says, “it just feels like [it’s] under the radar.”
Unlike cash, digital wallets come equipped with features like the ability to check bank accounts and credit card balances, create budgets, track spending, send money to friends and family, and even pay bills directly from a mobile device.
You don’t earn rewards for using cash
Another perk of digital wallets is that people can earn rewards. Whenever you make a purchase, you may be able to earn two percent on what you buy. However, digital wallets are upping the ante. Take Samsung Pay, for example. Not only can you earn loyalty, membership, and gift cards by using Samsung’s mobile wallet, but users can also now take advantage of Samsung Rewards.
Cash is a liability
Another reason why millennials prefer digital wallets is because they consider cash a liability. Meagan Rhodes, 27, told NerdWallet, “I’m worried I’ll leave my purse in a cab or hanging on the back of a chair and then I’ll never see that money again.” For many millennials like Rhodes, digital wallets give them a peace of mind because if their phone is lost or stolen, their wallet can be easily replaced.
Additionally, digital wallets have beefed up their security by using techniques like biometrics, two-factor authentication, and tokenisation, which means that information, such as your credit card number, is concealed. This makes it more difficult for a third party to steal this vital data. While using digital wallets is still prone to hacking, they’re considered safer than carrying cash.
It speeds up the transaction process
Millennials also love the convenience of digital wallets. Instead of waiting for change or a card to be inserted into an EMV-enabled terminal, they can simply scan their phone or wearable device and be on their way. By using radio frequency identification (or RFID)-enabled wristbands, festival goers could simply tap and pay for food, drinks, and merchandise. Compared to standing in long lines, this sped up the payment process, allowing them to go back and enjoy the show.
Millennials are already leading a digital life
Finally, millennials grew up with technology that previous generations didn’t have access to for their daily needs. Because of this, this new demographic is more likely to embrace new forms of payments that they can access on their mobile devices. In fact, a whopping 73 percent of millennials are excited about the potential financial offerings from innovative companies like Google, Apple, Amazon, PayPal, and Square.
The bottom line
While millennials are expecting a cashless future, cash isn’t completely dead. A recent survey found that 58 percent of millennials still preferred to get paid with cash because there aren’t any transaction fees involved.
However, one in four do favour Google Wallet, PayPal and the likes of it to pay friends or get paid. That figure could rise as long as digital wallets continue to become cheaper and more convenient.
Digital Wallets: The Reason Millennials Are Going Cashless was originally published on the Medium by John Rampton.