Written for Braintree’s “The Future of Fintech” series for BBC Capital
Don’t be fooled, your parents and grandparents know all about selfies, snapchats and swiping right. It’s unlikely they’re participating themselves, but make no mistake, they know what young people and their phones are up to.
While they may not be using their mobile phones to habitually document and share their daily existence the way younger generations do, it seems they’re fairly comfortable with the concept of buying goods and services through smartphones.
In fact, recent research by PayPal has revealed more than half of Australians over 50 use their mobile device to make purchases and payments, with 24% of respondents making mobile purchases and payments at least once a week.
74% of Australians said they'd paid phone, utility, insurance and other bills via a mobile device in the past six months."
Skills to pay the bills
If age is no barrier to using a smartphone, which industries are set to benefit as a greater proportion of older Australians adopt mobile buying behaviour?
As the Head of Partnerships for Braintree Australia, Christine Rodrigues says the biggest opportunities in mobile commerce lie in the most traditional categories. Braintree, a PayPal business, is the next-generation payment system behind some of the biggest mobile-first businesses such as The Iconic and Uber.
“If you look at things like utilities bills or insurance, we’ve gone from paying those over the counter to over the phone and eventually through BPAY and internet banking, so mobile payments is the next logical progression in changing that buying behaviour. In terms of who is making those payments, it’s the person with responsibility for the household bills, and they’re less likely to be from a younger demographic.”
Bill payments have become the gateway into mobile payment adoption as they dominate every other category of spending, according to PayPal’s research. Almost three-quarters (74%) of Australians said they’d paid phone, utility, insurance and other bills via a mobile device during the past six months. Outside of routine payments, the top five mobile commerce categories are rounded out with more discretionary spending on movie and event tickets (53%), clothing (43%), travel (38%) and food (37%).
Gen Y and millennials might seem like the ideal target demographic for that discretionary dollar, but smart businesses are beginning to target Baby Boomers. After living and working during the greatest period of economic prosperity in history, Baby Boomers are retiring in record numbers and looking for new ways to relax, unwind and enjoy their golden years.
People over 60 will be generating 51% of urban consumption growth in developed countries, or $4.4 trillion, in the period through to 2030."
A golden opportunity
The United Nations estimates about 35% of the world’s population will be over 60 by the year 2022 and, in economic terms, they’ll be the driving force in consumer spending over the coming decade. Deloitte has projected that people over 60 will be generating 51% of urban consumption growth in developed countries, or $4.4 trillion, in the period through to 2030.
Converging with the rising tide in Boomer spending is the approaching peak of smartphone ownership in Australia. The final hurdle in convincing laggards and Luddites to make the switch to smartphones will be when Australia’s 2G networks are switched off for good. Older Australians will be the most affected by the shutdown of 2G, as an estimated 15% of consumers aged between 55 and 64, and 22% of consumers over 65, are using a feature phone exclusively.
According to Rodrigues, convincing reluctant older Australians to make more payments and purchases through mobile will still have its challenges, but these generations are gradually beginning to adopt a more mobile-first approach.
“Right now, we’re seeing younger generations making more purchases on discretionary categories of products and services but that’s more to do with those businesses being early adopters of mobile payment technology. As more traditional industries catch up with their customers’ need for simpler and more intuitive mobile buying experiences, you’ll then start to see the flow-on effect of broader mobile payment habituation with older consumers.”
There may always be the occasional person hiding their cash in a mattress, but improved ease of use and mass adoption will also allay fears over security and fraud in mobile commerce.
“While those concerns may have been common in the early days of e-commerce, they’re no longer a significant barrier in the adoption of mobile payments,” Rodrigues says. “There was a lot of effort that went into the education of consumers early on around keeping your details secure, and as time has moved on, people now take it as a given that their transactions will be safe. That being said, it’s still essential that businesses work with the right technology partners to ensure those security concerns are addressed.”
Mobile mobility
Like every component of today’s digital world, user experience (UX) is the crucial enabler of mobile commerce adoption, and a key component of that experience is in designing seamless payment processes. In target markets where a degree of cynicism around the latest technology is almost certainly at play, Rodrigues says it’s essential the buying experience is as simple as possible.
“The real barrier to adoption of mobile payments is poor UX limiting people’s transactions on a mobile site and forcing them to fumble around and enter a credit card number every time they try to check out. That payment experience has to be sleek, convenient, and equipped with the functionality to remember their details for their next purchase.”
With Australia’s e-commerce economy conservatively valued at $20 billion, mobile commerce makes up about $5 billion of those purchases and that proportion is set to grow rapidly in the coming years. The runaway success of the everything-on-demand business model will certainly drive continued growth for mobile-first businesses, and the rise of payments in social media will also offer today’s hyperconnected millennials countless more opportunities to part ways with their money.
However, the real opportunities within mobile commerce are in established businesses who’ve built long-standing relationships with older segments of customers. Three out of four Australians are already using their mobile phone to make payments, but less than half of Australian businesses are able to accept mobile payments. For businesses in every consumer category, it’s essential to get ahead of the mobile commerce wave as it becomes the preferred method of payment for all Australians, regardless of their age.