Millennials are Waiting for the ‘Uber Moment’ of Payments

Whether it is Uber or Snapchat, it is no secret that millennials hold the key to the success or failure of digital innovation, often embracing new solutions en masse or rejecting them at pace. Research released today by VocaLink, the global payment partner to banks, corporates and governments, reveals that the latest technology being developed in the payments sector is yet to win favour with the millennial audience, with the majority of 18-35 year olds turning to their bank for payment solutions. The European-focused research is the second part of VocaLink’s global report, “The Millennial Influence”, examining the payments behaviour of millennials across the globe.

The research has shown that European millennials have an appetite for innovation in the payments sector but are yet to find a solution that both meets their needs and is significantly superior to existing payment methods. Fifty-five percent of millennials across Europe have never used mobile payment technology and products such as Apple Pay have had a surprisingly low uptake level across this audience, with only 2% in Italy and the UK, and just 1% in Germany and The Netherlands.

Cara O’Nions, Director of Marketing and Customer Insights at VocaLink commented, “The millennial generation is quite rightly pushing the payments industry to drive high quality innovation, currently dissatisfied with what is available today. 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.”

At this moment in time, it would seem millennials are still following their parent’s lead when it comes to making payments, using methods that they know and trust. So while attitudinally millennials may be game-changers, the research shows that more conservative behaviours are evident when it comes to making payments.  In Germany, they still have a reliance on cash, with 70% of Germans paying for groceries in cash vs 61% on card. In Italy, 28% of millennials are regularly depositing cheques, second still to the US, where 70% of people use cheques regularly. The UK are ahead of the curve when it comes to the use of cheques but this audience are still not fully embracing mobile payment technology, as only a quarter of UK millennials are using mobile payments technology.

Millennials are keen to embrace innovation from their banks, often favouring this over a more fragmented mobile payment market. In the UK, 58% of millennials would prefer to use a mobile payment service provided by their bank, followed by PayPal with 49%. This same trend was followed in The Netherlands but reversed in Germany and Italy, where PayPal topped the list of potential providers – a service that many millennials have grown up with and therefore see on par with their bank.  

Cara O’nions continued: “Payments are a core and critical part of everyday life and it is clear that this group have set the bar high in terms of expectations, and will only embrace new payment technology that can demonstrate ubiquity, speed, ease of use and security. It is particularly interesting to see that millennials would prefer to remain with traditional payment providers while they are waiting for advancements in the market, and if they were to consider mobile payments in the future, the majority would prefer that this was offered by their bank.”

The European study, follows the launch of the US millennials report published last week, which supported a similar viewpoint, with 70% of US millennials more likely to use a new mobile payment service if it was provided by their own bank, rather than an alternative payment service provider, echoing the sentiment amongst European millennials. Furthermore, when it came to biometrics, the millennials in the US were even more enthusiastic, with 67% opting for fingerprint recognition to make payments in the future, an unexpected statistic, when considering 87% of them have deposited a cheque in the last twelve months, it is by all means an archaic way of paying in Europe. The Europeans, were a little more cautious when it came to biometrics, with less than half of British and German millennials (42%) agreeing that they would use eye scans to verify payments, which would suggest that there’s an appetite for this type of technology, but there is still some reticence.

Across both markets, speed is key, with more than half of people from all four of the European countries surveyed agreeing that they would like to be able to make instant payments, regardless of who they bank with. This was also echoed in the US, where the figure was up to almost three quarters agreed with the same statement.