Boomers foresee the coming of a cashless society
Most Baby Boomers (79%) and Echo Boomers (74%) believe that society will one day operate without cash and cheques, and conduct all payments electronically, according to research conducted by The Segmentation Company for Visa USA.
Visa USA estimates that, by the year 2015, Echo Boomers and Baby Boomers will account for more than 50% of total US consumer spending, equalling some US$2.45 trillion and US$4.6 trillion respectively.
Big spenders Currently, industry estimates show that Echo Boomers are responsible for US$0.4 trillion in annual spending compared to US$3.8 trillion from Baby Boomers. "These two generations are the powerhouses of U.S. consumer spending," said Wayne Best, Visa's chief economist. "The shift in economic power from the Baby Boomer generation to the Echo Boomer generation will have significant implications across all retail categories. While Baby Boomers will remain a force even into their golden years, the rate at which Echo Boomer's spending will increase is a testament to their future economic impact."
To better understand this generational shift in spending influence and what that will mean to the future of the US economy, Visa USA commissioned the survey of Echo Boomers (18 to 28 years old; born 1979 to 1989), and Baby Boomers (43 to 61 years old; born 1946 to 1964), entitled 'How America Spends'.
No generational stereotypes Younger consumers (aged 18 - 28) are defying conventional wisdom when it comes to stereotypes often associated with their generation.
According to the study, Echo Boomers are demonstrating a more practical and mature approach to spending than is commonly assumed. They tend to view spending as a way to give back to others, and prefer retail categories that help to relieve time pressures. Surprisingly, many look to older generations for buying cues.
Key Echo Boomer findings Among the study's findings concerning Echo Boomers:
- Nearly half of Echo Boomers (48%) describe themselves as savers.
- Even at their young age, more than 70% of Echo Boomers are concerned about having enough money for retirement, a degree of concern similar to the about-to-retire Baby Boomers (78%).
- 88% of Echo Boomers like to buy things for others more often than buying things just for themselves.
- Echo Boomers cited dining out at restaurants as their second largest expense (45%), after housing costs (69%) in a given month.
- Echo Boomers said their spouses (70%), children (63%) and parents (48%) had the most influence on their spending.
- 37% of Echo Boomers believe older generations have an influence on their spending behaviour.
Key Baby Boomer findings Baby Boomers, on the other hand, have largely negative views of Echo Boomers, they tend to misunderstand their younger counterparts and as they leave the workforce and age, are beginning to spend according to their life stage. Among the study's findings concerning Baby Boomers:
- Only 25% of Baby Boomers describe the Echo Boomers as an admirable generation compared to 68% of Echo Boomers who admire Baby Boomers.
- Approximately 68% of Baby Boomers believe Echo Boomers are too self-centred and focused upon themselves Baby Boomers cited medical and dental costs and going out to restaurants as their largest expenses (45% and 42% respectively), after housing (75%).
- When it comes to splurging, Baby Boomers most often spend on their children or grandchildren (34%) and on vacations (16%).
- Baby Boomer's spending is primarily influenced by their spouses (63%), rather than their children (36%) or parents (34%).
- Only 15% of Baby Boomers believe the younger generation is capable of influencing their buying cues.
Cashless migration More and more, consumers are relying on their payment cards for purchases that were once only possible using cash, cheques and coins. Innovations in technologies and products - including contactless payments - are helping the transition to a cashless society.
In fact, the evidence for a migration away from cash and cheques includes several key factors:
- Debit More than three-quarters of adults in the US have a debit card (according to The Nilson Report) and the US Federal Reserve Bank reports that debit cards represent the fastest-growing retail payment method.
- Government More than 30 US states, including California and Texas, are saving millions of tax dollars by switching from cash to reloadable prepaid cards to disburse child care, unemployment, and other social benefits.
- Contactless and mobile Visa and its competitors have implemented contactless platforms that can accommodate a wide range of payment types including cards, mobile phones, and other handheld devices.
According to Kevin Burke, head of marketing for Visa USA, "As consumers look for payment options that enhance everyday life, Visa will continue to use a variety of channels and techniques to reinforce the benefits of its payment options that empower cardholders."
For additional information: · Visit Visa USA at http://www.visa.com · Visit Segmentation Co. at http://www.yankelovich.com