The post-War generation may be a little reluctant to favour contactless cards over cash but this only means business needs to get a bit more innovative.
Millennials are all over cashless payments. Dubbed “digital natives”, this generation knows how to pay for just about anything without reaching for notes and coins in their hip pocket.
But what about their parents? Having grown up filling money boxes with actual money and scrabbling through their wallets to pay for groceries, the baby boomers are perhaps more accustomed to a chequebook than a PayPal account. So is this older generation in danger of being left behind in today’s technology-led society?
Advancing the economy
Baby boomers, born in the post-World War Two years between 1946 and 1964, play an important part in Australia’s economy. There are 5.5
Australia and they comprise a substantial consumer group for retirement and age-related products and services.
They’re also a powerful financial demographic, with over-55 year olds controlling about a third of the nation’s wealth and almost a quarter of all disposable income. In fact, baby boomers are notorious spenders. Boomer households spend more each week than both younger or older households on food, alcohol, transport, personal care and miscellaneous goods and services, including rates and insurance.
baby boomers are a driving force in innovation and development in Australia’s economy
With this spending power, baby boomers are a driving force in innovation and development in Australia’s economy.
Taking up technology
They may not be on par with their tech-savvy children and grandchildren, but nor are baby boomers technological luddites. They own smart devices and are trying new online platforms: almost 90 per cent of 55-to-64 year olds use a mobile phone and a further 30 per cent use the internet via their mobile, data from the Australian Communications and Media Authority reveals.
However, boomers are not regular tech users and are largely playing catch-up with younger generations. For example, the average boomer has 12 apps on their smart devices, compared to the average Gen X with 15 and Gen Y with 20, McCrindle Research shows. Only 11 per cent of boomers use 50 per cent of their apps regularly.
Surveys show boomers use technology in a more practical way than their younger counterparts. While Gen X and Gen Y rely on their smartphones for lifestyle features, particularly social media, boomers are more likely to be task oriented, using their smartphones to check their email or the weather.
So it’s no surprise 18-to-24 year olds check their device on average 63 times a day and 65-to-75 year olds check their device only nine times a day.
Changing but slowly
Baby boomers have shown they can comfortably adapt to new technologies, which means a transition to cashless payments isn’t out of the question. But any business hoping to rush its older consumers into a cashless society may have to rethink its approach. Baby boomers have a tight grip on cash and won’t be pushed into ditching their notes and coins quickly.
Research by the Reserve Bank of Australia found that in 2007, 75 per cent of Australians aged 65 and over used cash to make payments and just 18 per cent used a card. In 2010 cash use dropped slightly to 73 per cent and card use rose to 21 per cent. But by 2013, the trend towards cash-free payments gained momentum and cash payments fell to 60 per cent and card usage grew to 33 per cent.
Needing more encouragement
Experts say baby boomers are ready to make the shift to the digital economy, but education and access are essential.
“In my experience, many baby boomers have embraced technology and when the transition to a cashless economy is made easy, they are also prepared to use innovations like Paywave”
Businesses need to show their older consumers the way forward, says a financial planner from Rising Tide Financial Services, Chris Browne. “In my experience, many baby boomers have embraced technology and when the transition to a cashless economy is made easy, they are also prepared to use innovations like Paywave,” Browne says.
“However, I believe that cash will continue to play a minor role in our economic community due to those boomers who are afraid of change or just simply hate the idea of technology dominating our lives. We must remember that this demographic represents 25 per cent of Australians yet holds more than 55 per cent of the wealth, so they are a fearsome and vocal lobby group.
“So unless, we metaphorically hold their hand and personally demonstrate how to use technology and how much time this will save them, we will continue to see ATMs littering our streets.”
Making the transition
A simple FAQ page will not be enough, Browne says. Companies need to be innovative in showing their customers how to live without cash. It may be an incentive-based program, free local workshops, feedback campaigns or simply staff members approaching customers on a one-on-one basis.
Access is crucial: businesses need to welcome cash-free payments and financial institutions need to consider issuing contactless cards as a matter of course. It’s important to communicate new cashless initiatives to older customers in a non-threatening way so they are aware of this gradual shift.
Predictions of a totally cashless society may never eventuate, but it’s clear we are slowly keeping less cash in our pockets than ever before. Going cash-free is a new frontier in how we transact on a daily basis and represents a huge change for older consumers. Baby boomers are ready to embrace new payment technologies and with a little help should make the transformation smoothly.
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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