Direct Debit Payments are Becoming the Next-Gen Payments for Millennials

Consumer payment preferences have been evolving rapidly in recent years, and the rise of alternative payment methods is reshaping the landscape of commerce. Millennials, in particular, are leading the charge by shifting towards using their bank accounts to pay merchants, especially when it comes with enticing rewards. In the next few years, alternative payment methods are projected to dominate e-commerce transaction volume.

The Rise of Direct Debit Payments

Consumer and business payment preferences are undergoing a significant shift, with alternative payment methods gaining traction. According to WorldPay, alternative payment methods accounted for 59% of global e-commerce transaction volume in 2020, and this number is expected to reach 71% by 2024. One alternative payment method that has gained popularity is paying merchants directly through bank accounts. The benefits for merchants of using such a payment method are lower payment Fees, instant access to capital, and increased customer loyalty.

One of the primary advantages of using bank accounts for payments is the substantial reduction in payment fees for merchants. Compared to traditional methods like credit cards or debit cards, direct debit payments can decrease payment fees by up to 90%. This cost-effectiveness can significantly benefit businesses, especially those operating on thin margins, such as gig economy platforms, marketplaces, restaurants, and retailers. 

Using bank accounts as a payment method cultivates customer loyalty and rewards. A recent study from PYMNTS and Nuvei suggests that a quarter of consumers who tried online bank transfers for the first time did so because they could earn reward points. Millennials, in particular, are drawn to this feature, with 26% expressing interest in using direct debit payments for retail transactions if offered the ability to earn rewards. In fact, more than half of consumers who have used this method in the past would be highly likely to use it again for retail purchases if rewards were available.

Rewards Influencing Payment Method Preferences

Rewards play a vital role in shaping consumer behavior when it comes to payment methods. PYMNTs and Nuvei’s research reveals that 32% of consumers consider the ability to receive rewards as a significant factor when choosing their preferred payment method. For 13% of consumers, rewards are the most important reason to use their preferred method. This trend is particularly pronounced among younger, high-income consumers. These findings underscore the importance of rewards in influencing consumers' decisions regarding payment methods.

Pay By Bank: Driving the Change

At Lynk, we offer Pay by Bank, an innovative payment solution that revolutionizes the way businesses handle transactions, whether online or offline. Not only does our payment platform provide a cost-effective payment process, but it also prioritizes customer loyalty and rewards. By leveraging Pay By Bank, merchants can tap into the growing trend of millennials using bank accounts for payments while simultaneously offering enticing rewards.

The rise of alternative payment methods, particularly the use of direct debit payments, is transforming the payment landscape. Millennials, driven by the allure of rewards, are leading this change. For businesses looking to stay ahead of the curve, it is essential to adapt to these shifting preferences. Embracing direct debit payments, like Pay By Bank, not only reduces payment fees but also fosters customer loyalty through rewards. By recognizing the power of rewards in influencing payment method preferences, merchants can retain existing customers and expand their customer base. As alternative payment methods continue to dominate, businesses must seize the opportunity to cater to the desires of millennials and drive growth in the ever-evolving payment ecosystem.

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Lynk offers a unique payment solution that is set to transform the way businesses handle transactions online or offline. Our innovative payment solution provides a cost-effective payment process and cultivates customer loyalty and rewards. With Pay by Bank, businesses can seamlessly collect instant or recurring payments with fee savings of up to 90% while enjoying instant access to capital, lower fees, higher revenue, and a seamless omnichannel experience. To learn more, visit: www.trylynk.com