Are Millennials Making Paycards Popular? by Global Cash Card
Millennials are currently the largest generation in the American workforce, and they are choosing unconventional banking options more than any other generation. Global Cash Card teamed with The Center for Generational Kinetics to sponsor a national study that explored the perceptions of American workers with respect to pay and paycards. The results were surprising! For example, our research found that roughly five million Millennials do not have a checking account, mainly due to a distrust in banks.
Understanding the employee perspective on pay and how it is received is critical for companies and leaders today as they compete to attract and keep the best possible workforce of every generation.
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The research revealed:
- Insight into the payment needs of four generations in the workplace
- Current employee perceptions of alternative payment methods
- Findings on who Americans think are better at managing money… men or women!
A New Financial Reality: The Rise Of Non-Traditional Wage Management
Millennials Choose Unconventional Banking More Than Other Generations
For many people, having a checking account is second nature. In fact, it’s such a way of life, particularly for older generations, that it’s rarely given any thought. After all, how exactly would one conduct everyday transactions without a basic checking account?
But in reality, tens of millions of people operate without checking accounts and this trend is becoming more commonplace with younger people for a variety of reasons. In fact, the study found that roughly 5 million Millennials in the U.S. do not have a checking account. They still work, earn wages, and presumably have bills and other financial obligations, but they are finding nontraditional ways of managing their personal finances.
This presents a potential challenge for employers because even though they are in no way responsible for the private financial decisions of their employees, companies still want to be able to meet the needs of their workforce. These 5 million Millennial employees, for instance, still need a way to collect and distribute their wages. And, if this can be done in a way that’s affordable and convenient for both employer and employee, everyone wins.
Distrust Is The Divide That Keeps Many From Traditional Bank Accounts
Why is a notable and growing group of people shying away from checking accounts?
For Millennials, the main reason is a distrust of banks.
In fact, 48 percent of Millennials who don’t have a checking account say the reason is that they do not trust banks. The same is true for Gen X, half of whom also cited this as a reason they do not have these accounts.
While other reasons for not having a checking account center around the high cost of operating this type of account or the hefty fees for making a mistake, the trust factor outpaces the others for Millennials, the largest swath of the population not using these services.
But clearly these Millennial workers haven’t dropped out of society. They still earn wages, need to spend them, and therefore must find alternative ways of conducting this payroll transaction. For this reason, it would appear that the employer with alternative options would look attractive to a demographic searching for non-traditional ways to manage their wages and personal finances.
The New Financial Solution: The Case For Paycards
Paycards Hold Value For Millennial Workers
For the study we defined a paycard as a card where payment for wages is automatically loaded on payday. The card can then be used like a debit card or at an ATM or bank for cash withdrawal, or the balance can be transferred into a bank account.
We found that this concept has value to workers, particularly Millennial workers. In fact, more than one-third of Millennials said that having their pay loaded onto a paycard each payday would be valuable. This means that approximately 20 million Millennial workers find the concept of a paycard valuable.
When this is coupled with the fact that this demographic is also the most likely to shun traditional forms of personal financial management, such as a traditional checking account, it makes sense that a financial product like a paycard would be appealing. A paycard offers a way for these workers to manage their wages with greater freedom, independently of institutions they distrust or cannot afford.
Paycards have value for people when they think about their individual lives, but what about the larger population of workers? Do paycards have value for employees in general?
The study found that the value of paycards extends beyond the personal preferences of individuals. In other words, people not only see the value of paycards for themselves, but they also see it as beneficial for others. Millennials in particular see the benefit of paycards for employees across ages and industries. In fact, we discovered that close to one-third of Millennials, 32 percent, think paycards are beneficial for all employees.
Offering Paycards As A Payday Option Is A Popular Idea
People like to have options. This is not news to consumer-facing industries and marketers who have learned that 31 flavors of ice cream makes for a far more exciting consumer experience than 3. And it’s also more chatter-worthy. People are far more likely to tell their friends about the caramel fudge superhero flavor they had for dessert than they are to mention that scoop of vanilla.
The bottom line is that customization and personalization are the name of the game. Just look at the countless coffee shop drink options, or the endless color swatches at furniture stores, or the never-ending aisles of counter tops, cabinet knobs, and faucets at home improvement stores.
But why should options stop with the consumer side?
The study found that employees like options as well. In this case, they like to have choices about how they receive their wages. For instance, 64 percent of Millennial employees think that paycards should be offered as an option for employees who want them. And more than half of the other generations agree. Fifty-one percent of Baby Boomers and 57 percent of Gen X also think paycards should be offered as an option.
See full PDF below.