Editor’s note: Ralph Dangelmaier is the CEO of BlueSnap.
McDonald’s, in an act of
desperation good will, has been letting some customers pay for meals with selfies, hugs, high fives and other forms of “Lovin.’” Yes, millennials have such low regard for McDonald’s that the brand is one step shy of paying people to eat its food. But this publicity stunt also embodies the “weirdness” that millennials bring to everything financial.
If millennials really could exchange money with a selfie, many of them would do it. Business can kowtow all they want to millennial values and culture in their marketing, but change must take place at checkout, too. Businesses need to adapt their payment experiences to the millennials.
The Bank of Apple
The millennials’ shifting expectations for payments isn’t simply a story about new technology – culture is a major factor, too. It’s well-documented that millennials hate the banks. Based on a three-year study involving more than 10,000 millennials, Viacom subsidiary Scratch found that banks are at the higher risk of disruption than any other industry.
Sixty-eight percent of millennials believe the way we all access money will be totally different in five years, 33 percent don’t think they’ll need a bank and nearly half are expecting tech startups to “overhaul the way banks work.” Their mistrust extends to the financial markets. As UBS found in Q1 2014, millennials hold 52 percent of their assets in cash while the average for older generations is 23 percent.
The reality of this anti-banking mentality struck home several weeks ago when we celebrated my son’s 15th birthday. I wanted to give him some cash or deposit money in his checking account. He wanted to deposit money in what he calls the “Bank of Amazon” and the “Bank of Apple.” For him, loading gift cards online is better than putting cash in a bank account. He doesn’t have to drive to a bank; he doesn’t want to have to ask for my permission to withdraw money; he wants to spend the money in one click whenever he chooses.
The Rebranding of Payments
A 15-year-old millennial can think like my son does because technology is rebranding the payment ecosystem. When my son hits “Buy now with 1-Click” on Amazon, he never sees a credit card or bank logo. The McDonald’s example, too, illustrates that when businesses change modes of payment, they change the face of our financial system. Customers feel like banks are out of the system, even if that’s far from the truth.
Consider how digital wallets contribute to this change. Instead of asking, “Can I pay by credit card? Do you take American Express?”, people are being retrained to ask, “Do you take Apple Pay?” As consumers stop seeing logos for Visa, MasterCard, Chase and Bank of America during transactions, they talk about them less.
The more sophisticated payment technology becomes, the more it seems to cut out awareness of the old establishment. The three Ps – Apple Pay, AliPay and PayPal – are becoming the new face of payments, especially to younger people.
Cater to Millennials
So the traditional payment system is being crunched. From one end, millennials want to do away with the banks. From another, tech companies are branding themselves as the facilitators of commerce, erasing the visibility of the card and bank system.
As a business, what do you do? What payment strategies will help you attract millennials without alienating other generations?
- Close the gap between online and offline commerce. Many multi-channel companies accept PayPal, Bitcoin, AliPay, Google Wallet and other alternative payment methods online. However, their storefronts are cash, credit and bank-card only. Today, with ubiquitous 4G coverage and Wi-Fi access, digital payment methods can be implemented in-store. Bake alternative payment choices right into your mobile app.
- Offer a variety of culturally appropriate payment options. If you sell globally, offer a quiver of payment options appropriate to each country in which you sell. Think about mobile market share when you consider introducing new, high-tech payment methods. For instance, in China, Android has over 80 percent of market share, so Apple Pay would serve few consumers. AliPay is the way to go. In the U.S., where iOS and Android are neck and neck, you have to consider options for both platforms.
- Market your payment methods. Present your payment selection early in the customer journey – on your home page or individual product listings. I’ve focused on millennials, but keep in mind that payment technology isn‘t strictly about them. Everyone wants a frictionless shopping experience. When people know they can buy using their preferred payment choice, they expect a successful checkout. The trust they place in their payment method transfers to your store.
Payments as a Competitive Edge
Millennials have attitudes toward payment institutions that seem weird to Gen Xers and Baby Boomers. What is so inconvenient about swiping and signing for a credit card? Why wouldn’t you want your money invested in stocks or accumulating interest in a bank? McDonalds’s, forget the damn selfie, I’ll pay $2 to not deal with that.
While businesses do cater to the millennial generation’s quirks and values, I would argue that most merchants are overlooking millennial attitudes towards payments. Use their ‘weird’ preferences as your own competitive edge.