“The times they are a-changin'.” Bob Dylan famously sang those lyrics more than 50 years ago, but they feel right at home in 2018, don’t they?
Yes, change is all around us every single day, and the payment solutions market is no different. In fact, we’re seeing some really big changes now brought on by consumer behavior — specifically the behavior of millennials.
A recent Bloomberg article appearing on Fortune.com shows that millennials are overwhelmingly moving away from credit cards and toward debit or prepaid cards as a portable payment solution. Research shows younger people are also more likely to pay cash than previous generations. So why the shift? As the article shows, there are a number of reasons.
Taking Control Over Debt Management
There are many possible reasons millennials are making this shift, but overwhelmingly the push seems to be rooted in a response to their experiences.
For starters, many millennials were just starting their professional careers when the market collapsed in 2008, and the fallout of that trying time has left some skeptical. At the same time, they are also a generation that has had to suffer more student debt than any other, as debt for an ordinary bachelor’s degree has risen 164 percent from 1990 to 2015, according to Education Department data appearing in the Bloomberg article.
The research also suggests that many millennials grew up in homes where they witnessed friends or family members suffer under the burden of debt and that may have caused them to take another route.
Searching for Other Alternatives
Research from TransUnion finds that millennials are likely to carry fewer credit cards and keep a smaller balance on the cards they do keep than even their Gen-X counterparts. And while legislation reducing the marketing opportunities for credit cards on college campuses has played a part in this shift, millennials are also interested in researching other options, including prepaid cards.
Utilizing a prepaid card allows the user to set a predetermined amount on the card — if they want to — and to "refill" their card anytime. Users can then spend the money on the card until the balance has decreased before refilling it again. The result is a card that offers the same convenience but provides increased visibility and control over the amount that is being spent, something not only millennials, but all consumers can benefit from.
Because, as the song says, “the times they are a-changin',” and consumers, now more than ever, need the freedom to change with them.