We’ve all been there — you go out to eat with a group of friends only to realize that everyone wants to pay with a credit card. You could make the poor waiter split the check (something that they never seem very happy to do) or designate one person to cover it with the intention that everyone else will pay them back. So will you send your friend a check, wait to pay them in cash, or try one of those money-sending apps you’ve been hearing about? It seems more and more Millennials are now answering with the latter.
A new study by GOBankingRates found that, while cash is still the most popular choice, peer to peer (P2P) payment options are gaining stream among those aged 18 to 34. Over a quarter of those asked said they prefer to use apps like PayPal or Venmo when receiving money from a friend or paying someone back. For the record only 8% like writing or getting checks while another 8% use electronic bank transfers.
There are many reasons that users like P2P options. The biggest reason is convenience. While Millennials may prefer to receive cash, having cash on hand is rare for many 20 and 30-somethings. In addition to the logistics of getting to an ATM there’s also the matter of making change to ensure you don’t overpay. Meanwhile P2P apps allow users to send the exact amount they need to and have it taken directly out of their bank account or charged to their credit card.
Another feature that appeals to Millennials is being able to gently remind friends that they owe them money. Most P2P apps give users the ability to request money from others and have the debtor be notified via text message or e-mail. This also helps keep track of who owes who — an important feature since those in this age group apparently lend and borrow money more than any other.
As for which apps in particular are the most popular, the winner is PayPal with 11% of overall respondents citing it as their preferred method of payment. Venmo had 6% followed by Google Wallet with 5.1% and Square Cash (which has a deal with the popular app Snapchat that allows users to “snap” each other funds) at 4.3%. Incidentally Venmo has been owned by PayPal since 2013.
While they still have quite a ways to go before catching up to cash, the growing adoption of P2P apps among Millennials is encouraging for FinTech overall. It indicates this generation is willing to look beyond the status quo and seek new alternatives that offer greater convenience and ease of use — a staple of many FinTech operations. This is just the latest sign that the future of banking is digital and it’s time to get on board.