According to the Boston Globe, millennials are throwing out their checkbooks and cash and opting for mobile payment options via apps on their smartphones. Once the app is on their phone they can connect them to bank and credit card accounts and be used to pay for rent, utilities, bills, dining out, and for peer-to-peer (P2P) transfers.
The apps are free to download and most levy modest fees for transaction. Charges vary for sending and receiving money through debit or credit card. For example, Dwolla, a P2P payment network startup, takes 25 cents from those receiving more than $10, while Venmo users who send money through a credit card get docked 3%.
Millennials spend $1.3 trillion as consumers annually, according to Boston Consulting Group. They are the biggest users of mobile payments apps as well, accounting for 55% of those who use digital services.
The service is growing speedily. The total volume of mobile and online P2P payments through financial institutions and nonbank providers reached $74.9 billion in 3013 and is expected to grow.
Venmo, one of the many mobile payment tools, handled $314 million in mobile payments in their first quarter this year, up 62% from their prior quarter.
According to Ron Shevlin, senior analyst at Aite Group, individuals exchange about $1 trillion in the U.S. every year.
No single provider dominates the market so far and financial institutions that do not offer P2P services risk losing younger customers.