It’s no secret that the COVID-19 pandemic significantly accelerated the shift away from cash, with people all over the world embracing digital payment options and mobile-first technology.
When used well, contactless cards, online banking and digital wallets, such as ApplePay, can lead to a seamless and stress-free payments experience. In fact, we’re already seeing a significant proportion of schools across the UK going cashless by introducing
digital wallets for their pupils to pay for school meals or trips.
While it’s undeniably easier for a busy parent to top-up a digital wallet via a quick bank transfer, for pupils there’s a level of pressure that they need to spend this responsibly. This is just one example of how the evolving nature of the industry is presenting
challenges for the younger generations and those seeking to educate them about responsible spending.
It’s clear that more financial education is needed across the education system, the Money & Pension Service found that just four in ten children and young people had some financial education at
Finding more space in the curriculum and building the skills and knowledge within schools to deliver a more thorough financial education will go a long way to equip the next generation with the tools they need to make the most of their money and avoid problem
We have also seen a number of tools developed to introduce earlier financial education over recent years, such as the GoHenry debit card and financial education app, designed to support children and teenagers with
responsible spending. Allowing families to set money saving goals and digitally transfer money once chores are completed, the app can support young people as society continues to shift away from the use of cash.
These steps are certainly encouraging and, as well as fostering further support in the school curriculum, there is more that the industry can do to support younger generations for a rapidly shifting payments landscape.
A changing landscape
According to PWC analysis, global cashless payment volumes are set to increase by more than 80 per cent between 2020 and 2025,
from about a trillion transactions to almost 1.9 trillion. Asia-Pacific nations are expected to see the fastest growth, with cashless transaction volume growing by 109 per cent until 2025, followed by Africa (78 per cent) and Europe (64 per cent). Latin America
comes next (52 per cent), with the US and Canada growing least rapidly (43 per cent).
With the cashless revolution clearly continuing at pace around the world, we are seeing more organisations adapting their business model in line with the demands of the modern consumer.
For some this involves embedding the technology required to process instant payments, manage monthly Direct Debit payments and digital wallets. Others are taking things a step further by introducing new technology such as buy-now-pay-later (BNPL) services,
crypto and digital currencies.
Given the speed at which the industry is evolving, it’s understandable that younger generations are concerned about their level of financial education. In fact, one survey of
more than 2,000 15-18 year olds undertaken by the London Institute of Banking found that 81 per cent worry about money, while 67 per cent had become more anxious about money as a result of the pandemic. Of those surveyed, 72 per cent said they wanted to learn
more about money and finance in school with just 15 per cent citing school as their main source of financial education.
What can businesses do?
For businesses, there are a number of steps that can be taken to ensure that consumers fully understand the implications of their financial decisions - whether that’s committing to a monthly subscription or making a one off payment, as well as offering greater
flexibility around collection dates and frequencies.
The first thing to consider here is choice. With a specialist payment solution in place, businesses can offer more choice around how and by what means a customer makes their ongoing payment. Given the current economic uncertainty, this is essential as millions
of people will be reassessing their level of disposable income and potentially realising that their monthly spending is unsustainable. For younger generations especially, being able to offer greater choice will help a brand standout from the competition.
Secondly, a business needs to be able to identify those who might already be falling behind on their monthly repayments. Without the right technology in place, businesses rely on staff to manually process customer payments and identify any concerning trends.
Not only is this time-consuming, it’s also a process prone to oversight and error. A digital payments solution can immediately identify those customers who might be struggling to keep up with their monthly repayments before the problem spirals.
Should a customer miss a payment this will automatically be flagged in the system, allowing a member of the team to quickly reach out to find out if the agreement in place needs to be changed or altered in any way. Similarly, if a customer calls themselves
to request a change in the frequency of their payments, they expect a seamless process and for the business they are engaging with to have their full account history to hand.
Younger generations are also more likely to be interested in signing up to a subscription- based service, such as Netflix or Apple Music, and it’s essential that businesses can provide reassurance
around the agreement. From a consumer point of view, being able to easily engage with the subscription provider and make changes to their account, should they need to, is of major importance.
With a digital payments solution in place, businesses can offer customers a broader range of payment options depending on their individual circumstances, as well as reducing the administrative burden associated with managing these subscriptions.
As the industry continues to evolve at lightning speed, it’s important that businesses are taking the necessary steps to ensure customers of all ages - especially those in the early stages of their financial independence, understand their spending. No matter
the service they are offering, a specialist digital payments solution designed to facilitate flexibility is crucial to achieving this goal.