My college-aged son was traveling last month with a bunch of friends. I asked him how they managed to equitably share all the trip expenses (thinking that the credit card I gave him before he left for school probably took the brunt of it). His reply? Venmo. Sorry, Ven-what?
Remember when paying for something meant cash or checkbook? Then we evolved to credit and debit cards. This is where I must be stuck in a baby-boomer time warp. As a member of this 50-69 year-old bracket, I still carry cash and write checks. Yes, I carry plastic, but not a debit card (don’t you write a check instead?). Now there’s all sorts of solutions for P2P payments like PayPal, Venmo, Square, Google Wallet, Snapcash, Dwolla, or FaceCash. Or crowdfund your needs with Kickstarter, Indiegogo, Crowdrise, Quirky, or Tilt. Even crowdfund on smartphones with TaskRabbit, Gigwalk, Roamler, or Uber. Huh?
Staying current on currencies is a challenge. The way people pay for goods and services has left many of us in the dust. Remember a book called DOS for Dummies when the personal computer first came out? Well, I needed Payments for Pinheads to explain the new dialogue and acronyms. So, I thought I’d share my gathered insights with you all, potential peeps in the new online platforms and peer-to-peer (P2P) world of payments.
Let’s start with WHO is paying WHO. Many times these days, the bank doesn’t play a major role in the exchange of money. Oh yes, they’re still there. Just very much behind the scenes. Today, payers and receivers work P2P, or Peer-to-Peer. Like my son, he simply filled up the car with gas. $50 on his debit card while his four friends clicked into Venmo on their smart phones and contributed $10 each directly to his Venmo account…all before the gas cap was locked in. No paper, no checks, no ATM’s, no obvious banks, and definitely, no credit.
What does that say about credit since I brought up the “C-word”? My son doesn’t have a credit card (that’s why he had mine in his pocket). What’s more important is that he doesn’t want one…and neither do his friends. This Millennial generation aged 19-34 years, our up-and-coming buyer who will out-number us Boomers this year, is categorically against credit. 4 By contrast, our industry’s current “average buyer”, Generation X aged 35-49 years, has higher average debt than either Boomers or Millennials, even when excluding mortgages. Their average credit score is nothing to brag about either, at 650.1 We’ll come back to this as credit (still) makes our world go-round and Millennials are opting out while Gen X’s are tapped out. As service providers, that’s bad for business.
Back to P2P…peers paying peers can come in a few flavors, all dependent on desired outcome. Sometimes it’s just an individual paying another individual. Other times, people in need will “crowd fund” so that many people may contribute to their need, cause, or business startup. All of it driven by the internet and often transacted via the smart phone.
How does this new payments mentality affect us in the funeral industry? What is the role of credit? Do we stay in our time warp, or is it time to get current with new ways for our families to pay?
Here are some statistics that reflect what you’re seeing in the marketplace and hearing during your discussions with families:
- 47% of families don’t have enough in savings to cover a $400 unexpected expense. 2
- 63% of Millennials don’t have a credit card; 3 Gen X push their bankcard utilization to 41% when the ideal bar is no more than 30%. 1
- The average Gen X has a 650 FICO score while Millennials scratch out a 625, near or at sub-prime. 1
How on earth do most families pay for funeral services? They don’t – not enough cash on-hand; insufficient credit available; and a FICO score that doesn’t support more. So…they compromise. Maybe they choose cremation instead of the burial they truly want. Without a better way to pay, their choices are limited.
With the technology available to serve them better, we have it within our power to ease their stress by providing compassionate care and financial options…options that acknowledge the challenges they face around available cash and credit. Consider how your conversation with a family would change if you could say, “Don’t worry, I can help you pay for the service you imagine; easily, affordably, and without additional credit hassles.” Might you be their hero? The technology to do so is here. It’s called CareCap.
Visit Michelle and CareCap at the NFDA, booth #867, for more information and a special convention offer.
2 Federal Reserve Oct 2014 Survey