André Pfohlmann, an associate for the Banking Industry Business Unit at SAP, recently wrote an article in DigitalistMag that explores the recent trend amongst millennials and certain countries towards a cashless society.
“There is research suggesting that 25% of millennials carry less than $5 in cash with them,” he explained. “Supposedly, more than a third of my generation envision a society where no physical currency is used in any transactions.”
In Sweden, says Pfohlmann, 80% of transactions are paid digitally with a new mobile payment app known as Swish, which claims more than half of the country as users.
“Besides simplicity and lower costs, digital payments add transparency to the country’s payment system, with several banks already 100% digitized and not accepting any cash,” Pfohlmann continued. “[Meanwhile], India is also on the path to becoming a cashless society. Indian Prime Minister Narendra Modi is asking his country to take advantage of digital payment channels in light of a recent government ban on high-value rupee notes.”
Nevertheless, says Pfohlmann, it is difficult for him to imagine paying for absolutely everything with an app.
“From my perspective as a digitally driven millennial consumer, I believe that it is possible to one day become a less-cash, or even cashless, society. However, I don’t believe it will happen tomorrow,” he concluded. “Security, more universal standards and merchant adoption are just a few of the things that I see standing in the way of this movement.”
Indeed, consumers clearly require assurances that their mobile payment information will remain secure. Similarly, stores and financial institutions need to be confident that the technology behind mobile payments is secure and easy-to-use before it can be truly embraced. As such, mass adoption of mobile payments will ultimately be achieved only when there is a single, unified platform built on an economy of digital trust that ensures an uninterrupted physical to digital experience.
In the meantime, millennials worldwide continue to be enthusiastic adopters of mobile payments. In fact, a recent survey commissioned by VocaLink found that more than a third of Dutch millennials (36%) and a quarter of UK millennials (25%) are now making mobile payments in-store, online and in-app. As Rian Boden of NFC World reports, the survey also found that 58% of UK respondents would prefer to use a mobile payment service provided by their bank.
Moreover, one in 11 UK millennials are already paying for car parking using mobile payments. In addition, VocaLink confirmed that 70% of U.S. millennials are more likely to use a new mobile payment service if it was provided by their own bank, while 67% of US respondents said they would use fingerprint recognition to make a payment in the future.
“The millennial generation is quite rightly pushing the payments industry to drive high quality innovation, currently dissatisfied with what is available today,” stated Cara O’Nions, director of marketing and customer insights at VocaLink. “While payment preferences differ across the world, our research shows that in nearly all cases, millennials are consistently looking for substance over style — technology that is seamless and secure and allows them to make payments instantly.”
As we’ve previously discussed on Rambus Press, mobile wallets offer consumers a convenient, “tap and go” frictionless commerce experience that seamlessly integrates loyalty cards, boarding passes, ID cards, coupons, event tickets, alerts and notifications. For retailers, mobile wallets can enable businesses to engage users with an immersive, in-app experience that starts at the beginning of a retail journey and continues beyond with notifications, reminders of upcoming expiration dates, archived digital receipts and a real- time tally of current loyalty bonus points. For banks, digital wallets, which are far more secure than credit or debit cards, have fast become a strategic focus as consumer interest ramps up.
Indeed, according to Forrester Research, U.S. mobile payments accounted for an estimated $67 billion in 2015 and are projected to increase to $83 billion in 2016, or 24% of all purchases made via smartphones.
Interested in learning more? You can check out our mobile payments product page here and our recent ebook on the subject here.