For those of a certain age, pulling out plastic at checkout might be second nature. Credit cards, however, are quickly falling out of favor among younger shoppers, specifically millennials.
According to data from the Federal Reserve, the percentage of Americans under 35 who hold credit card debt has fallen to its lowest point since 1989. While a majority of older Americans own a credit card, just 33 percent of adults between the ages of 18 and 29 can claim the same.
In order to win over such shoppers, retailers are working to eliminate many of the obstacles that currently prevent them from pulling the trigger on purchases without a credit card. E-commerce giant Amazon recently launched a new offering, Amazon Cash, that gives customers the opportunity to shop online using nothing but cold hard cash. By presenting a personalized barcode that’s delivered via text message or printed at home, shoppers can add between $15 and $500 to their Amazon balance at participating stores such as CVS and Speedway.
Plenty of competing retailers are looking to follow in Amazon’s footsteps – and for good reason. FuturePay’s report, “The Big Ticket: What’s Stopping Shoppers?,” found that nearly three-fourths of 18-to-35 year-old shoppers believe having more payment options is “very important” or “somewhat important.”
For retailers, there’s never been a better time to entice shoppers who prefer not to use a credit card online. From prepaid cards that often tack on extra fees to gift cards that can be easily misplaced, current payment methods don’t always live up to expectations.
By offering an alternative payment option that enables shoppers to complete a purchase however they’d like, retailers can increase loyalty and decrease cart abandonment while also opening the door to purchases that might have previously been difficult, or even impossible, to go through with. When it comes to reducing the friction of online shopping, simple conveniences such as in-store pickup and returns can provide retailers with a big edge over industry competitors.
Younger shoppers are ditching credit cards in favor of alternative payment methods that better cater to their spending habits. For retailers, the choice is clear, adapt to these changing consumer preferences or potentially suffer the consequences of losing the newest generation of shoppers.