If the average American’s wallet or purse were examined for different kinds of currency, there would be a mixed bag.
Almost every American adult would have some coins and paper bills, a checkbook, a debit card, one or more credit cards, and perhaps some coupons or gift cards. But, in the last few years, there have been some new payment methods introduced for customer convenience. For those with no credit history or unfortunate credit ratings, there are prepaid cards. Access to PayPal on smartphones and other electronic payment methods are quickly gaining popularity.
Studies have shown how different age groups prefer to pay. Coins and paper money both have a place in every age group for small purchases. Other forms of payment find preference with different age groups. Businesses around America must decide what forms of payment to accept. Some forms are more costly to handle than others. For instance, credit card companies charge merchant fees and require expensive card readers to process. Checks written on customer’s bank accounts can come up NSF. When that happens, the merchant’s bank will charge them large service fees. Each form of payment has risks and hidden costs.
Payment Preferences By Different Age Groups in America
- All age groups use some coins and paper money for small purchases. Costs of cash are that it is easy to steal or misplace, has inconveniences in mailing bills, and results in ATM fees.
- Senior Citizens use cash, paper-based checks, and some credit cards. Senior citizens are users of American Express if they can afford it. AMEX has the appeal of prestige for higher-income seniors. The disadvantages of AMEX cards are the limited acceptance and high annual fees when compared to other credit cards. Checks are favored by seniors who send payments through the mail, but they have costs such as check printing, envelopes, stamps, checking account service charges, and processing delays. Approximately 68% of those over 65 use checks. All credit cards have processing fees and security issues to consider.
- Middle-Aged Adults make up the Generation X group—those individuals younger than 65 but born before the 1980s. They still use some cash and paper checks but prefer plastic. They came of age during the most popular years of the credit card boom. They are used to the “swipe-and-sign” culture that took hold during the 1970s and 1980s. This age group tends to be more financially secure with longer credit histories. This “purchase now and pay later” aspect fuels more expensive buying habits. The credit card downsides are high fees and the threat of data breaches. The recent advent of EMV chip cards is helping prevent in-store credit card fraud.
- Generation Y is made up of those born in the 1980s and the 1990s. They have the most variety in their payment methods. They use cash, credit cards, paper checks, and digital technologies such as PayPal, smartphones, and the internet.
- The younger Millennials tend to use electronic payment methods, cash, and prepaid cards. These cards that get periodically loaded with funds may not seem convenient, but young people often do not have an established credit rating. They may not qualify for traditional credit cards yet.
Payment Forms Merchants Should Offer
Since merchants want all the customers they can get, they need to offer the forms of payments their customers prefer to use. Merchants should keep track of what payment forms different age groups prefer to pay and offer those if possible.
By using a payment processing service such as BluePay, they can get more forms of payments supported for affordable costs. For more payment preference information, go to the website.