Security and privacy are two major reasons why consumers in general choose to use one form of payment over another in online transactions—but these concerns are less important to consumers aged 18 to 29, according to a new report from Javelin Strategy and Research.
This group is more influenced than is the general population by incentives such as whether a payment method integrates with a loyalty or rewards program or is attached to other financial incentives such as sweepstakes entries or savings, according to “Generation Y payments behaviors and attitudes: Customer service and targeted rewards attract lucrative young adults.”
The survey of 2,800 consumers including 560 Gen Y consumers found that greater protection from identity fraud would influence 60% of all consumers to consider using a form of online payment different from the one they already use—such as a credit card user switching to a debit card or an alternative form such as an e-check or PayPal, for example. But only 46% of Gen Y consumers said this would influence them to switch. The ability to keep one’s identify private in online transactions would influence 51% of all consumers to consider a switch, but only 40% of Gen Y consumers.
But 34% of Gen Y consumers would consider switching to another form of online payment if it were integrated with loyalty or rewards programs, versus only 28% of all consumers. And 35% of Gen Y consumers would be influenced to switch by financial incentives attached to a card, such as sweepstakes entries or savings, versus only 27% of all consumers.
“Merchants and payment providers can rely on security and privacy as the leading adoption driver with mainstream consumers, but these are not a silver bullet for increasing relatively lower online usage among Gen Y,” the report says. The survey also found that only 75% of Gen Y consumers have made an online purchase, versus 80% of all consumers.
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