Financial institutions should focus on marketing to individuals between the ages of 18 and 34 to grow their emerging consumer-payments businesses. But the so-called Millennial Generation surprisingly is nonplussed by mobile payments, despite its growing exposure in the market, suggest the results of a recent study.
Harris Interactive conducted the online survey of 3,271 U.S. adults 18 and older this summer for Hitachi Consulting and the Bank Administration Institute. First Data Corp.; Fidelity National Information Service Inc., known as FIS; MasterCard Worldwide; the Pulse electronic funds transfer network; and U.S. Bancorp sponsored the research.
The results suggest that 88% of consumers have not used mobile payments for in-store purchases nor do they plan to do so in the next two years. Only 5% of respondents said they owned a mobile phone with in-store payment capabilities, with 45% of that group being Millennials.
Consumer reluctance to embrace mobile payments stems from fraud and theft concerns, according to Hitachi. As such, financial institutions should develop mobile-payments strategies that include educating consumers about the payment method’s safety and security, Hitachi suggests.
At 80% of respondents, the Millennial Generation had the highest debit card ownership. The group also had the highest ownership of contactless-payment devices at 12% of respondents. But that age segment had the lowest rate of credit card ownership at 56%.
Overall, debit card use continues to grow, while the use of credit cards, cash and checks is dropping, the survey found.
Among respondents, debit card use grew to 42% of their in-store transactions this year from 37% in 2008 and 33% in 2005 (see chart). Credit card use declined to 19% of in-store transactions from 22% in 2008 and was flat compared with 2005 data. Check use declined to 5% of in-store transactions from 8% in 2008 and 11% in 2005, and the use of cash declined to 26% of in-store purchases from 29% in 2008 and from 33% in 2005.
Consumers view debit as a good way to maintain a budget, and Neckopulos suggests financial institutions focus on that point in their marketing.