Paying Millennials: The Trend Toward Digital
This article was updated on July 3, 2018.
It should come as no surprise that millennials, renowned for being digital natives, are transforming the way businesses work. In particular, paying millennials is stirring up change, as they ask more and more to be paid digitally.
Mobile apps such as Apple Pay make it easier for people to leave their wallets and credit cards at home and make and receive payments via their always-at-hand mobile devices. According to Salesforce's 2014 Mobile Behavior Report, the average American spends 3.3 hours per day on a smartphone, and an increasing number of those Americans are engaging in mobile banking. Leading the way in digital transformation? Millennials.
Millennials Want to Be Paid Digitally
Millennials are spearheading digital wage payments, and businesses should pay attention. Why? Millennials are now the largest generation represented in the U.S. workforce, according to Pew Research, and they expect employers to have their technological act together. Technology is a main driver of millennial workplace engagement, according to Harvard Business Review.
"Younger demographics (18–34) are twice as likely to already be using mobile payments versus the 35+ demographics, and much more likely to start using mobile payment in the next 12 months," FICO notes.
But what will the future of digital payment look like?
"Less than a decade from now, most payments will probably be made with apps in phones or smartwatches, using biometric triggers or other mechanisms that don't involve swiping or using plastic cards," according to Marketing Land. Similar to how credit cards have replaced cash, it's likely digital payments will soon replace credit cards.
The Apple Pay Example
With the explosive growth of the iPhone, Apple has moved aggressively into the mobile payment business with Apple Pay, which is now accepted at more than 2 million locations, including stores, restaurants and hotels. Apple Pay gives users access to credit cards, store credit cards and rewards cards without having to dig out their wallet.
The convenience and security of digital payments adds to its adoption. One important security advantage of mobile wallets is that they don't transfer actual credit card information to the retailer, so a mobile wallet provides no account information that can be compromised in a breach. As an additional layer of security, Apple Pay needs biometric authentication in order to work, so even if an Apple phone is lost or stolen, a criminal would need a fingerprint to use the mobile wallet, according to Risk & Insurance.
Compliance With PCI DSS
As organizations move forward with digital payments, however, it's important for them to keep compliance in mind. Compliance with security standards in the realm of digital payments will be important for the development of the entire digital payment ecosystem. Any system your organization selects to make digital wage payments should be compliant with the Payment Card Industry Data Security Standard (PCI DSS). PCI DSS compliance requires having a secure network, data security standards, access control and regular system monitoring and testing.
Accommodating the Digital Payment Trend
For organizations that seek to engage their employees, it will be crucial to accommodate this trend by developing a mobile strategy for delivering wage payments and ensuring any solution is PCI DSS-compliant. Benefits for employers include heightened employee satisfaction and reduced payment costs related to the of printing and distributing paper checks.
Paying millennials is just one aspect of a larger generational shift in the workforce. As millennials increasingly dominate and transform today's workplace, organizations should adapt the way payments are issued to align with their digital expectations. While digital payment technology continues to evolve and improve — even as compliance with security standards remains an issue — it's clear this trend will only grow. By failing to adapt to digital payments, organizations risk losing the engagement of their most tech-savvy employees.
Apple, iPhone and Apple Pay are registered trademarks of Apple, Inc.
