Instant payment apps grow up. They're not just for millennials anymore

  • Once the hybrid social-financial app of millennials, boomers and Gen X are starting to use P2P payment apps.
  • Originally millennials used the apps to pay for mojitos ─ now it’s anything from utilities to rent to vacation costs.
  • Millennials may use them more frequently and for smaller amounts, yet older users depend on the apps for less frequent, larger payments.
Tara Moore | Getty Images

You know a platform or tech is successful when it becomes a verb. A payments app owned by PayPal joined the ranks of Google and FedEx (at least in verbal usage) a few years ago when millennials began "Venmo-ing" each other to settle bar tabs.

Mobile peer-to-peer payments now include Square, Apple Pay Cash and Google Pay, among others. Less than a year ago, Zelle entered the space and quickly became a huge player.

One reason for its success: Zelle is not only a standalone app, like Venmo. In addition, it integrates with a user’s existing banking app.

The digital payments network now works with Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank, SunTrust and Wells Fargo.

People tend to trust financial institutions, making mobile payments more attractive to older generations, according to Zelle, which recently studied how different age groups behave and think about P2P apps.

Zelle questioned more than 9,000 U.S. mobile-savvy millennials, Gen Xers and boomers who own smartphones, are aware of P2P and have used online or mobile banking.

“What stood out is the openness among older generations to start actively incorporating P2P services into their day-to-day banking habits,” said Ravi Loganathan, head of digital strategy and operations at Early Warning, Zelle’s network operator.

Since security is a top issue for Gen X and boomers, removing that barrier opened the door to many more users.

The generations still approach P2P differently. Here’s what you may or may not know about P2P and millennials, Gen X and boomers.

It's not just millennials paying bar tabs

Restaurant checks and bar tabs are still popular. But that’s not all.

“Millennials use mobile payment options for everything,” said Alicia McElhaney, founder of She Spends, a website and newsletter to help women close gaps in wages, investing and board seats.

If you split rent and utilities, Venmo, Zelle and similar platforms are useful for paying your half of the bill. Those expenses can really mount up, especially in cities where the cost of living is high. “Millennials also use these payment platforms to split vacation costs, whether for rentals, plane tickets or food,” McElhaney said.

A good way to manage cash effectively

P2P transactions can be a useful way to manage your cash and maintain quicker access — provided the app immediately transfers the funds to your bank account.

“If your grandparents write you a check and you don’t cash it for two months, that could be a problem,” said Loganathan at Early Warning. Checks can take three to five business days to clear, which can be a pain point for people whose cash flow is limited.

After a transaction in some platforms, the money is parked in that third-party app until the consumer actually requests the funds move back to their bank.

Gen Xers were the age group most likely to say they’d rather have their money under their mattress than in a third-party app where their money sits idle.

‘Pay me back now, please’

One behavior is consistent among all demographics: Everyone wants to be paid right away for money they’ve laid out. Let's say you bought concert tickets for next month. Zelle asked survey respondents whether they'd want to be paid back immediately, whenever is good or when the credit card statement comes in. Two-thirds of each group said they’d like the money back ASAP.

About a third of millennials ask to be paid back within minutes, according to Zelle’s study, a sign of that generation's reluctance to be parted from their money.

To compare, 40 percent of boomers don’t ask for repayment: They wait for the money to show up in their accounts.

You don’t have to disclose bank credentials

It’s easy to move money around. The Zelle model is a financial ecosystem that lets different institutions send money from bank to bank, Loganathan said.

“You’re a Chase customer, but you’re able to send money to Bank of America without putting in your bank credentials,” Loganathan said. “They’re all on the Zelle network.”

Everyone loves a gift

All generations use digital payments to show their love.

“Gifting is a key piece for boomers,” Loganathan said. From cash birthday or wedding presents, Gen X and boomers send money to their kids through P2P.

“I have friends who, if they know someone is having a bad day, will Venmo them $15 for a manicure or a nice meal out,” said She Spends' McElhaney.

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