Cash Still King for P2P, Even Among Millennials
Mobile P2P services like Venmo and Facebook’s Messenger payments have garnered much attention for their popularity among the prized millennial demographic. But new evidence suggests such services may have some work to do before replacing cold, hard cash as U.S. millennials’ go-to method of paying friends and family. A recent study from VocaLink polled more than 5,000 U.S. consumers ages 18 to 35 on their payments behavior and preferences. And while the survey found that cash has lost ground to cards for most types of payments, it’s stubbornly clinging to the No. 1 spot when it comes to P2P.
Survey respondents cited cash as the most popular way of lending money to friends, with 53 percent saying they uses cash for that purpose. Cash was the most popular method of sharing a bill and paying someone for work they’ve done, at 47 percent and 49 percent, respectively. Cash also ranked highly for tipping (58 percent), coming in just behind payment cards (61 percent). Nineteen percent of millennials even reported paying their rent in cash, according to VocaLink, a majority of which was acquired by Mastercard in a $1.1 billion deal earlier this year.
The lingering popularity of cash for P2P payments among millennials reveals the difficulty of converting the “last mile” of payments to electronic methods—and also why so many providers have taken to the mobile channel in their attempts to finally vanquish cash. Smartphones’ ubiquity among the demographic—98 percent of millennails in the VocaLink study used one—makes mobile a natural channel through which to engage young consumers. But as the study indicates, changing behaviors—even among the “digital natives” of the millennial generation—remains a tall task.
VocaLink itself has focused on developing mobile P2P services in recent years. In 2012, the company was commissioned by the UK Payments Council to build a central database to enable British consumers to link their mobile phone numbers to their bank accounts. The project was designed to help U.K. banks building enroll customers in their own P2P mobile P2P programs.
Related stories:
- Mastercard Makes Big U.K. Play with $1.1 Billion VocaLink Investment
- P2P: Poised for Growth?
- Report: A Boon for Banking, Payment Apps as Mobile Attachment Grows
