With payment technologies evolving from cash and checks for Baby Boomers (and older) generations to contactless and mobile payment options, offering the right payment choices for your customers is complicated.
The obvious and durable choice, cash is still with us, despite predictions of a cashless society.
A 2014 Federal Reserve report says cash is still a strong favorite for all age groups. Consumers use cash more often than other forms of payment, including debit or credit cards for the following reasons:
- Cash is best for lower value transactions
- Cash is useful for specific types of purchases
- Cash is sometimes the only alternative
- Cash is the preferred payment choice for Gen Y
- Cash is the best payment option for lower income individuals
- Cash is hack proof
Besides liking the feel of folding money in our pockets, each generation has a preferred way of paying for things, traceable to what was available as they came of age.
Baby Boomers and Beyond
Baby Boomers and older people are now retiring in large numbers, and many have learned to use more advanced payment methods, such as online payments. However, this generation is the biggest user of paper-based checks and American Express to date. In fact, about 68 percent of people over 65 still write out checks and mail them to pay all their bills. Higher wealth individuals tend to prefer American Express for its prestige and acceptance worldwide. This age group sticks to what it knows best – checks and cash have been monetary staples since coming of age in the 50s and 60s.
Middle Aged Generation Xers
The “kids” of the 1970s and 1980s are now easing into middle age and cling to their credit cards. They grew up as credit cards proliferated and made “slide-and-sign” payments popular. Gen Xers are in their prime earning years, have longer credit histories, and better opportunities for increasing income. Credit cards allow the Gen Xers to live comfortably, buying what they want and what they need. Curiously, some Gen Xers find chipped EMV (Europay, MasterCard and Visa) cards confusing.
Generation Y Rocks On
Consumers born in the 1980s to mid 1990s have it all: they grew up accustomed to cash, checks, and credit cards and they’re adept at digital technologies including mobile payments and PayPal. Yet, Generation Y’s young adults still lean heavily on cash – possibly because they are still in school, working off student loans, in low-paying or early professional jobs.
Generation Z (Millennials)
The first generation of the 21st Century, born in 1995 or later, is fully digital, having played with cell phones from birth, so electronic payment methods including PayPal and smartphones with tap-and-go apps are natural for this group. This generation has been surrounded by social media and mobile technology from the time they could walk; their online information access affects how they see the physical and digital world. With easy access to the Internet and its plethora of products/services, Gen Z approaches buying much differently than previous generations.
Generation Zers like combining technology with a brick-and-mortar store experience. They browse online, then head to a store to make the purchase. Although it’s tempting to generalize about Gen Z and their purchasing habits, this demographic is still evolving as they mature.
If your online or brick-and-mortar business caters to one or more of the age groups described, you will want to focus your marketing and payment options on their preferred methods. However, if you serve many generations, making it easy for everyone to buy from you will serve your profit goals more successfully.
My question: since we have used up X, Y and Z in the alphabet, what will the next generation be called?
For more information about credit card and merchant services processing, contact Mike Krause, firstname.lastname@example.org, 585-704-6453.