Digital Native entrants have been quick to exploit Mobile Payments

The 80 million members of the millennial generation represent 25% of the U.S. population and more than $200 billion in annual buying power. (source: US advertising firm Barkley). Millennials are typically defined as those born between 1980 and 2000.

According to a 2012 study this group has influence over $500 billion of indirect spending, primarily because teens and young adults influence the purchasing habits of their parents (source: U.S. Chamber of Commerce Foundation). Millennials’ annual spending is expected to reach $2.45 trillion by 2015 (source: Deloitte). Clearly there is need for better understanding and finding new ways to target this important demographic.

They are price and value conscious. However they are willing to pay for convenience, flexibility, and quality. They are open with their personal information in this digital age. Yet security is important to them. Above all, they want to have interactive experiences no matter what they do – this means mobile devices are central to their universe.

This generation loves their debit cards; credit cards and cash not so much. Millennials are more likely to choose debit for payment than any other group - 80% of debit transactions originate from this demographic (source: Hitachi Consulting sponsored by First Data). An estimated 20% have not made cash purchase over $5 in the past 30 days (source:

Mobile payments are not far behind when it comes to Millennials making payments. They are as much as 2.5 times more likely to try new technology compared to others (source: U.S. Chamber of Commerce Foundation). Research by American Express revealed 52% of consumers ages 18-24 are likely to try new technology-enabled payment tools. And with 75% of 25-34 year-olds owning a smartphone and 90% percent of them using the Internet, it’s easy to see why they are so comfortable with mobile technology and are interested in including mobile payments in their shopping experience (source: Pew Research Center).

Speaking of practical scenarios, food chains themselves show evidence of mobile payments being adopted by millennials. Some popular cases are:

Subway – collaborated with Paydiant to launch cloud based mobile wallet app. User can scan QR code at POS to make payment. Subway is also a mobile ordering app developed by ZippyYum.

Wendy’s – smartphone can use a dedicated app which generates a six-digit code to be provided to cashier to make payment.

Taco Bell – offers a smartphone app for ordering and payment. The app lets customers place an order, customize it and then pay using credit cards and even gift cards. A special feature that the app includes is the GPS locator which gives an estimate of the customer for order pick-up.

Burger King - introduced an app to allow customers to pay for Whoppers using their smartphone. In order to actually make payments, users can load value onto a virtual card within the app.

Domino’s Pizza - integrated Google Wallet into its Android ordering app. This will allow app users to pay for their online order using the popular digital wallet service. Google wallet allows user to store debit cards, credit cards and loyalty cards as well.

Chipotle - known for its Burritos, invested $10 million to integrate mobile payment into its branded app which already has over 3 million downloads. The integrated payment system would either be using bar codes as in case of Starbucks or Bluetooth.

Chick-Fil-A - launched its standalone mobile payment app. Customers have option to choose the pickup method and for actual payments, credit card information is stored to speed up the orders.

Dunkin Donuts – its payment and gifting app achieved 3.5 million downloads in its first year. It has its dedicated mobile for iPhone as well as for Android devices. The app provides a virtual Dunkin Donuts card which can either linked to a physical Dunkin Donuts card or to an actual credit card. The app also provides in-built PayPal payment facility. Upon ordering, the app generates a QR code used by the employee to confirm the payment.

StarBucks - has its app used by around 10 million U.S. customers with around 5 million weekly transactions. Starbucks clocked around $1 billion in mobile payments in 2013. The app uses QR code technology to authenticate payments. Starbucks partnered with companies like Square to provide in-app payment platform and linking the app to credit and debit card details.

This clearly shows that we should not miss the big picture. When millennials see mobile payments begin so good at Starbucks they ask for the same at Taco Bell and Wendy’s. That’s why we witness many other merchants having their own mobile payment systems. And perhaps going forward they will also force smaller merchants, even your regular hot dog guy, to adopt mobile payments as an option.

We are digital immigrants but our kids are digital natives. They have iPads and iPhones in their hand while we had Abacus and TV. Technology companies are gearing up to the millennial generation whether it’s about renting movies, purchasing Vanilla Latte at Starbucks or withdrawing money from ATM machines. Banks large and small are paying close attention to the move towards cardless ATMs, with some leading the front, and others watching to see how this pending shift unfolds.

The mobile payment industry is forecasted to account for $1 trillion in global transactions by 2015. Its high time that merchants and retailers who cater to the demands of this demographic stand to offer an option for mobile payments. Mobile payments are receiving much attention as the next big trend in the payments arena.