Are Mobile Payments the New Credit Cards for Millennials?
Anyone who thought that the credit card would be a concept that would last forever, it could be forgiven; a lot of people certainly thought that way.
New reports, meanwhile, suggest that the credit card’s dominance may be coming to an end, as millennial users are falling off in favor of mobile payments and other systems.
Word from TabbedOut suggests that mobile is big with millennials; 70 percent of millennials have turned to a mobile payment system at some point. That’s not so big a point, but follow this up by noting that 45 percent of all prepaid debit card use is also millennial use, and suddenly, a pattern emerges.
Some believe that the millennials are eschewing credit cards in general, having graduated from high school and college during the worst of the 2008 financial crisis.
Given that millennials are generally considered to be between 18 and 36 years old—that number varies depending on who’s asked—high school and college students back in 2008 would be fairly well represented, particularly by the lower half of the millennial tier.
Of course, it doesn’t really help that millennials are likely to have a tougher time even getting a credit card in the first place. The events of 2008 that left millennials so concerned about credit left banks equally gunshy, and offering up credit cards to young borrowers—particularly since said borrowers don’t have much of a credit history in their own right—isn’t on many companies’ to-do list.
Since mobile payment systems offer many of the same perks as credit cards, like rewards programs, and are on a platform many are already familiar with—plus mobile payments systems can generally be used to rent a car or reserve a hotel room—the idea of why anyone would want a credit card is far-fetched to many.
Millennials are familiar with credit’s risks, and see many of its rewards available elsewhere. With parents available as co-signers for home loans, the need of a simple instrument like a credit card buckles somewhat.
Mobile payments have been a while in proving worth, but thanks to a lot of dedication, this system may well be poised to surpass the credit card as the go-to financial instrument of the next generation. That’s a major change, but one that the millennial customer may be bringing into play.