BluePay is pleased to bring you this valuable information from our partner, Due, makers of a free digital wallet that allows users to easily make and accept payments online.
Millennials look at money differently than any previous generation has. Millennials are quick to adopt new technology, with many trading in the idea of cash -- they really don't want to be bothered or bogged down with traditional payment methods. The Millennial, as well as many others, are ready to get rid of the cash, altogether in exchange for digital wallets that hold their money and credit.
However, those that study spending habits have found that not using cash tends to lead to overspending because there is a lesser connection to how money is being spent and how this may be depleting the bank account. When using cash, consumers are much more aware of the value of money for each item they purchase.
Better Transaction Records for Improved Spending
Millennials are much more cautious with how they spend their money, essentially growing up in a society that was already using debit and credit cards over cash for most transactions. Therefore, they have learned to adapt their money strategies already -- to stay updated on what they have available in terms of funds. The Millennial will tell you it is these digital wallets that help them stay updated on exactly what they have and what has been spent.
That’s because the new reality is that electronic transactions, like mobile payments, are actually easier to track how money is being spent, than cash, where receipts tend to get lost or never received.
Millennials tend to be more aware of their finances on some levels, than other generations, shunning certain large purchases like cars and homes, in exchange for investments and savings. They have turned to budgeting apps and tools like digital wallets that link directly to their bank accounts, and most track every penny spent.
These budgeting tools and digital wallet real-time balance updates tell Millennials more about what they really have available to spend, helping them make better decisions than if they had cash, which feels unrealistic to them.
One millennial said in an interview for Bankrate, that cash felt more like Monopoly money, rather than something tangible for her to use. Therefore, she worries that she would waste it -- whereas digital funds are more realistic to her, so she uses them wisely.
Other millennials note that many of the items in their digital wallet, provide incentives like cash-back bonuses, discounts, and other incentives that help them make money – as long as they pay off the balance each month, rather than having those rewards replaced by interest payments. Obviously, using cash doesn’t offer those same rewards, so there is less of an incentive to use paper currency.
Cash Still Is Still Used, But Far Less
However, there are still places within society where cash still dominates and digital wallets are not accepted, forcing even Millennials to resort to paper and coins. This includes places like Craigslist and other online sale sites as well as apartment and neighborhood laundry machines, some small businesses, and service personnel that may need a tip like a hairdresser, taxi driver, or bellhop. Still, other retailers offer cashless transactions, but charge a fee if a minimum transaction amount is not made.
Yet, Millennials find these issues minor compared to the benefits they see in using digital wallets and avoiding cash as much as possible. They much prefer the convenience of tapping and paying, as well as selecting a peer-to-peer payment service to split a restaurant tab, or pay their part of their rent money.
Other generations are slowly catching on to these benefits and are also allowing their smartphones to become an extension of themselves. That’s why surveys are finding that more people don't carry much cash on them – both millennials and non-millennials. For example, the Independent Community Bankers Association (ICBA) conducted a survey in 2014 and found that nearly 25 percent of millennials tend to carry less than $5 in cash at any time. A LinkedIn-backed study also found that 32 percent of millennials surveyed envisioned a cashless society. A CCG Catalyst Consulting Group study of millennials and digital wallets, found that 93.9 percent of Millennials have smartphones, with 53.7 percent of that demographic saying that they prefer cards to cash. Interestingly, 51.3 percent of non-millennials also liked the idea of going cashless, illustrating a definitive shift in perspectives about transactions in the last couple years as electronic transactions have developed.
Just the Beginning of Transaction Revolution
A digital wallet for millennials is just the beginning of what they see in terms of completely electronic transactions, where no one has to touch or exchange any type of physical currency, changing the role of banks and other financial institutions within society.
While we are not there yet in terms of being cashless, the Millennials are propelling this new type of transaction preference with the potential for a completely different way of receiving and paying for goods and services in the near future.