Changes in technology and generational preferences may affect the way government interacts with constituents and takes payments. As millennials and members of Generation Z push for better and more efficient technology, their preferences are changing systems in government agencies for how people can make payments and more. Demanding and discerning consumers, the younger generations seek a better customer experience and expanded payment options. Government agencies should consider modernizing their systems to better accommodate the expectations of these constituents that make up half of the American population.
Who Are Millennials and Generation Z-ers?
According to Pew Research Center, millennials were born between 1981 and 1996 (ages 24 to 39 in 2020), and anyone born from 1997 onward is part of Generation Z. Generation Z is the largest age group in the world, and together, the two generations make up more than half of the American population.
While there are plenty of differences between and among these generations, millennials and Generation Z-ers share some notable characteristics and behaviors. Known for being sophisticated consumers, they demand creative payment choices with greater control, security, and rewards. They also are more willing than older generations to take risks on new payment trends that promise a better user experience or financial rewards.
The younger generations value individualization of products and services, and they expect organizations to adapt to meet their needs. They embrace technology, but still crave human interaction, and are more diverse than any other generation. Transparency and trust are key in interacting with members of these generations.
How Millennials Interact with Government Agencies
Government agencies process a variety of applications and payments. Across the country, many of the processes and software government agencies continue to use are becoming outdated. Many agencies require payments be made by mail or in person. Not only do these legacy systems pose greater security risks and require specialized knowledge to operate and maintain, they offer a subpar user experience. Outdated software functions more slowly, extending the time it takes to process transactions. They often require multiple steps with non-intuitive tasks, causing frustration and dissatisfaction. Unsupported machines take longer to bring back online when they experience technical difficulties.
Most public-sector agencies would benefit from improved customer experiences. Constituents, especially younger ones, expect greater convenience, value reliability, and accuracy. Whether filing for taxes, submitting a permit application, paying a fine, or asking a question, consumers have high expectations for customer-centric experiences and low tolerance for inefficiency and time-consuming steps. Digital delivery of government services is desired, balancing digital-only interactions preferred by most millennials and Generation Z-ers with multichannel options or a mixture of digital and personal services.
Millennials interact with government payment technologies as employees as well. Use of inefficient, clunky systems negatively affects employee satisfaction along with lowering productivity. Millennial employees expect to work with more up-to-date tools and that their employers innovate accordingly.
Millennial Preferred Payments Technologies
Cash as a preferred payment method continues to decline. Consumers making all or most of their purchases in cash fell to 18% in 2018, down from 24% in 2015. Other traditional methods to make payments remain prevalent, with 70% of Americans using credit cards and 61% using debit cards. Still, more than half (56%) made at least one mobile payment last year. Use of mobile payments is skewed heavily toward younger generations, with 74% of respondents who used mobile payments were members of Generation X or younger, while 62% of traditional payers were Baby Boomers (born from 1946 to 1964) or older.
Mobile payments include both online and point-of-sale (in-person) purchases, payments, and money transfers conducted with a smartphone, through use of a mobile web browser, app, or text message. Mobile payments can be entirely digital, occurring completely virtually via Internet, or mobile payments can be made in person, using a point-of-sale device such as FivePoint’s brand-new FivePoint Accept product that accepts mobile wallets such as Apple Pay. Another payment technology option is a payment kiosk. Such kiosks can conduct payment transactions as well as accept document submissions.
Prevalence of Smartphone Transactions
Recent surveys show that nearly all members of the younger generations own a smartphone, with 92% and 96% of millennials and Generation Z-ers respectively. Increasingly, use of these smartphones is the primary means of accessing the Internet, with 58% of 18-to 29-year-olds reporting they mostly go online through a smartphone and 47% of those 30 to 49 years saying the same.
Digital payment is set to be the preferred mode of payment for U.S. citizens, according to industry forecasts. For example, 41% of all shoppers said that their smartphone or tablet is becoming their most important shopping tool, and mobile payment already is the preferred mode of payment among millennials.
Impact on Government Agency Technology Choices
To better serve their constituents, the majority of whom are now under the age of 40 years, government agencies need to adapt their payment technologies, streamlining and modernizing the payment process. Embracing new payment methods and channels benefits the public sector as well, streamlining processes and removing tedious, error-prone tasks from staff. Additionally, improved customer experiences lead to enhanced trust and confidence in the agency overall. At a time when public trust in the government remains at historic lows, the boost in confidence brought by improvements in payment technologies would be welcome.
As a greater number of transactions take place with smartphones and more payments involve mobile technologies, government agencies should review their current payment options and identify areas for improvement and change. For help with this evaluation and to discuss payment alternatives that might work with your agency, contact FivePoint Payments.