The economic issues of the recent past have not only shaped Millennials as consumers but as shoppers as well.
The Great Recession left Millennials to struggle with a lack of job security, mounting student loan debt and financial anxiety. In fact, forty-one percent of Millennials are straddled with student debt, which has left many weary of taking on additional debt with credit cards. Fortune reported just 1 in 3 Millennials carry plastic, and if they do, it tends to be a prepaid or debit card.
Therefore, it’s no surprise that these financially conscious and debt-averse Millennials are now seeking new payment options from retailers that provide them more flexibility and control over their finances while they shop. Weary of credit cards and untethered to traditional cash or card payments, Millennials seek out wallet-friendly payment alternatives such as payment apps and layaway plans.
Venmo, the digital wallet app, is overtaking cash as Millennials’ preferred method of payment, and retailers are taking note. According to Retail Dive, the number of merchants that accept Venmo has exploded to over two million merchants. Retailer Abercrombie & Fitch has even added Venmo as a payment option within its own mobile app.
Other retailers are working with financial companies to provide shoppers layaway payment plans. One in five Millennials have used a layaway plan, as the flexibility of dividing up payments over time is a huge draw. Afterpay is an example of this type of service. Afterpay allows its users to pay in installments, interest-free, for purchases from participating retailers including Steve Madden, Forever 21 and DSW.
Millennial shoppers no longer see payment as just cash or card. Therefore, retailers need to provide a flexible range of payment options to keep up with the needs of financially conscious shoppers as they age and become big spenders.
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