In the next four years, millennials will become the customer segment with the greatest personal income, growing to an aggregate $8.3 USD trillion by 2025. At that time, millennials will represent 75 percent of the workforce and 46 percent of total US income1.
This growing segment of people aged 19-35 will increase their use of cards and related technologies as they grow older—and their expectations around how card programs should work for them differs from previous generations' expectations.
Four reasons why issuers shouldn’t miss this opportunity:
Visa’s proprietary Payment Panel data indicates that millennials use cards for 57 percent of their spending2, and with increasing wages and reduced debt, they’re an attractive target for debit and credit card marketing.
They’re willing to migrate cash and other transactions to card products, when designed for their needs. Millennials are also more likely to revolve and pay fees3.
You need to understand the motivations and behaviors of this generation to capture their interest, because millennials are more fickle than other consumers. They are five times more likely to close primary bank accounts4 because:
Millennials use a range of card products, including debit cards for money management, and credit cards for rewards. To maximize your millennial segment strategy, you should consider offering and positioning both of these products to meet their needs.
Click on the tabs below to learn more about millennials, payments and VPS solutions.
Stand out from the competition by offering product features, benefits and services that appeal to millennials. We've analyzed insights from Visa sources and third-party surveys to help you understand the features and benefits they expect from payment products.
By the age of 28, a majority of millennials have multiple cards in their wallets, and a key reason is to avoid carrying cash. Visa data indicates the ages at which millennials adopt various payment products and financial services.
The needs of millennials vary depending on their ages and life stages, as their needs change over time. Your product portfolio should offer a variety of products to meet their needs as they mature.
Consider offering:
When choosing a new credit card, millennials generally look for the same primary card features as other age segments6:
However, millennials differ in their needs related to budgeting and building credit. Visa research indicates that despite a desire to do so, many millennials lack the information they need to build credit. Without this information, millennials may avoid or delay credit card use, which contributes to this group having the lowest average credit score of any age group and more than 50 points below the national average7.
Younger millennials avoid credit because they have an aversion to debt. By offering credit building education and tools, such as free FICO scores, issuers can support millennial customers in building credit and becoming comfortable using credit.
Millennials use personal financial management (PFM) tools more often than other age segments. They're budget-oriented and use personal financial management tools. Forty percent of consumers who use finance apps or visit mobile finance websites in a typical month are millennials8. By offering budgeting apps and tools, you can provide a valuable service while creating a better relationship with your customers.
Establish your institution as a partner in helping customers build and use credit wisely by providing credit-building and budgeting apps and tools. Budgeting capabilities should be included in mobile apps to reach millennials through their desired channel. As an example, you can:
Make products more appealing to millennials by incorporating the following features and benefits:
| Product | Preferred features | Preferred benefits |
|---|---|---|
|
Debit
|
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|
Credit |
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1 U.S. Census 2011, Consumer Expenditure Survey 2011.
2 Visa Payment Panel Study was commissioned by Visa and conducted by independent global research company, TNS, using their proprietary panel of households, most recently surveyed in Q3 2014-Q2 2015.
3 Phoenix Marketing International, 2015.
4 Fair Issac: Millennials and Retail Banking, Forging Lasting Banking Relationships with Millennials, FICO 2014.
5 Global Payment Tracker 2013, Visa Payment Panel Study, Q2 2012–Q1 2013.
6 “Payment Choices and Revolver Activity,” Cardbeat U.S. Edition, Volume 21, Issue 7, Auriemma Consulting Group
7 Experian.
8 Merkle Marketing Insights, Nov 2015.
9 Fair Isaac Corporation, Options and Opportunities, “Forging Lasting Banking Relationships with Millennials,” 2014. Question: How likely are you to consider the following types of companies for banking related needs in the next 12 months? Base: 18-24 (n=76), 25-34 (n=143), 50+ (n=503).
10 Source: Javelin, Mobile P2P Payments in 2015: The Growth and Adoption of Mobile Money transfers, 2015.
11 Mercator, "Opportunity of P to P payments," Customer Monitor Survey series, Financial institutions and channels, 2014, Question 56b.
12 The New York Times, “New Credit Score systems could open lending to more consumers,” 10/9/15.
13 Earnest.com website.
14 Source: Forrester Research, “Consumer Technographics,” North American Retail Online Benchmark Recontact Survey, 2015.
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