Consumers in America continue to head toward a cashless — and maybe even checkless — future when it comes to making payments, according to a study released this week by a payment provider for the financial services industry. Nearly 60% of consumers expect all payments to be completely digital in the next three years, and that percentage only goes up when you look at younger generations.
Only 37% of consumers use checks at least once per month, compared with 77% who use bank or debit cards, 71% that use online bill payment solutions like portals, and 53% who use apps like Venmo or PayPal. As can be expected, younger consumers are driving the increased adoption of more digital tools and moving away from traditional payment options like cash and checks. Nearly 70% of members of Generation Z and Millennials are using apps like Google Pay and Apple Pay, compared with about 10% of Baby Boomers. About 30% of Boomers are using apps like Venmo and PayPal, compared with three-quarters of members of Generation Z and Millennials.
There is also a tendency to use more digital payment options if a consumer is more affluent, according to the study. About half of individuals with household incomes under $35,000 are using a payment app at least once per month, compared with more than 70% of households earning at least $150,000.
Security and privacy are the driving forces behind using digital payment options, above other benefits like convenience and cost.
“… modernization enables banks to leverage emerging technologies such as artificial intelligence (AI) and machine learning to optimize transaction processing, fraud detection and risk management,” according to Temenos, the author of the report. “Payments modernization also opens doors for collaboration and partnerships with fintech companies, payment processors, and other industry players. By integrating their systems and leveraging shared expertise, financial institutions can tap into new revenue streams, expand their reach and deliver value-added services that go beyond traditional banking offerings.”