Millennials and the Rise of Prepay
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March 14, 2018
Outline
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Why Millennials, and why Prepay? Are We Ready for the “New” Prepay? Prepaid Electricity is Trending Where is Prepaid Electricity best suited for Energy Retailers? What’s the takeaway?
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“This group is swiftly becoming the largest and most influential U.S. demographic group. For energy providers, ignoring them just as they
become energy consumers could mean losing this group to an increasingly complex set of new competitors and market entrants,
eagerly waiting in the wings.”4
- Forbes.com
Why Millennials, and why Prepay?
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Millennials are poised to represent the largest generation in the US.
MILLENNIALS
Prepaid electricity, as a product choice, is trending
upward.
PREPAY ELECTRICITY
Millennials have a clear preference for prepaid
cards over credit and even debit cards.
PREFERRED PRODUCT
Why Millennials?
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2016 U.S. Census Data1
71 million Millennials
74 million Baby Boomers
By 2019
73 million Millennials 72 million Baby Boomers
Why Millennials?
• NYC and LA remain millennial magnets • Smaller cities however, are seeing the
greatest growth2
• In Texas, young populations are growing particularly fast
• Houston #2 • Austin #3 • San Antonio #7
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Why Millennials, and why Prepay?
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Of “Millennials with Money” prefer using prepaid cards3 to credit cards and debit cards
60%
They’re big, they’re bad, and they like prepay!
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80% Of US prepaid card owners are Millennial or Gen X8
24% Are early adopters4
30% Of total retail
sales4 by 2020, about $1.4
trillion
63% Have NO credit
cards5
70+ M Millennials
Why Prepay?
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83% of millennial prepaid card users ALSO have debit cards, so why the preference?
To avoid debt. And it’s less about “anti-credit card” and more about “risk of debt.”5
To better budget and track their spending
Adhere to the “mobile first” mentality.7
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Are We Ready for the “New” Prepay?
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Prepaid Electricity is Trending
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Current Adoption
Rates
Anticipated Adoption
Rate in 2020
Similar Industry Mobile Phone
Plans
Adoption rates for prepaid electricity have risen over the
years. Utilities have moved from “pilot” to “launch.”
2014 Survey8 shows Prepay is now considered a “Mega-Trend” with a clear “generational” shift
Mobile phone industry adopted prepaid plans
long ago. They’ve made prepay “sexy.”
5-10% 20% 32%
Prepaid Electricity is Trending
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Why the interest in prepay electricity?
43% see it as an option for bad debt (OLD)8
31% feel it is newer and more convenient8
45% feel it would increase communication with
their utility8
27% see it as a means to save money on energy
bills8
Where is Prepay Best Suited for the Energy Retailer?
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7 million smart meters 20% = 1.4 million
Currently <150,000
Pilot planned for AEP-Ohio Enrollments begin Q3, 2018
Petition pending Maryland PSC Case No. 9641
Implementation June, 2019
Old Prepay Start in markets that support SCB
“New” Prepay The sky is the limit
What Are the Key Takeaways?
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For Baby Boomers – “It’s Over” For Millennials – “I’m not gonna’ be ignored”
Prepaid electricity, like prepaid cards, is trending, largely due to the Millennials.
2020 is the year! Focus on the “new” prepay and create a “mobile first” buying experience
Partner with someone who knows prepay, and can offer it as a complimentary product to postpaid billing
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Sources
1. http://www.pewresearch.org/fact-tank/2018/03/01/millennials-overtake-baby-boomers/
2. http://time.com/4797956/cities-millennials-moving/
3. http://time.com/money/4182923/millennials-prepaid-cards/
4. https://www.forbes.com/sites/energysource/2016/08/25/energy-providers-must-engage-millennials-today-or-risk-losing-them-as-customers/#9daadee6411a
5. https://www.bankrate.com/finance/credit-cards/more-millennials-say-no-to-credit-cards-1.aspx
6. http://www.businessinsider.com/the-rise-of-reloadable-prepaid-cards-could-affect-the-way-millennials-approach-banking-2016-4-2
7. https://www.medialogic.com/financial-services-marketing/blog/are-millennials-making-prepaid-cards-the-must-have-payment-product/
8. http://defgllc.com/publication/prepay-energy-at-an-inflection-point/
9. https://www.cnbc.com/2015/04/06/prepaid-debit-cards-on-rise-thanks-to-millennials.html ttp://time.com/4797956/cities-millennials-movin
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