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Generation Z is growing up—and so are their spending habits. According to a Bloomberg report, young students and professionals command $360 billion in disposable income. That’s more than double what it was three years prior.
Businesses are bending over backward to appeal to these picky consumers, whose purchasing behavior is dramatically different from other generations.
But one area of the buying process can be easily adjusted to align with Gen Z preferences—the payment method.
Let’s dive into what makes Gen Z tick, how they like to pay, and what businesses should do to win the “Internet Generation” over.
Generation Zers were born between 1997 and 2012. They’re the second youngest generation and represent about 20% of the US population as of 2023.
Gen Zers are the first generation to be immersed in a digital world since birth. They grew up with the internet, smartphones, and social media—making Gen Zers open-minded about integrating tech into their lives.
Gen Z cares about the world they live in. They’re dedicated to social and political issues and demand authentic brand voices that align with their values.
While they’re accustomed to online platforms, Gen Z (as well as Millennials) shop almost equally online and offline. However, regardless of where they shop, Gen Zers demand seamless, frictionless payment experiences.
Ecommpay found (65%) of Gen Z survey respondents were “very likely” or “somewhat likely” to abandon the checkout in the middle of an online payment if their preferred payment method isn’t available.
Being surrounded by digital advancements for their lifetime has set high expectations for convenience across every Gen Z experience.
Perhaps this is why Gen Z has developed considerably different payment preferences than Millennials, Gen X, and Baby Boomers.
In the EY Gen Z Payments Survey, Gen Z was up to three times more likely to use an alternative payment method, such as contactless payments, payments apps, Buy Now Pay Later, and in-game currencies compared to other generations.
To appeal to Gen Z, businesses must offer multiple payment options and keep up with advancements in FinTech as 79% of Gen Z have tried a new payment method in the last year, the highest share across age demographics.
Some generational favorites include:
Gen Z is leading the pack when it comes to digital payment adoption. That’s because the method aligns perfectly with their preferences.
Billtrust found when survey respondents were asked to rank the importance of speed, user experience (UX), security, fees, and a low carbon footprint as they pertain to the payments platforms they use, nearly half chose security as the most important feature, with fees second.
Digital payments enable multi-factor authentication (MFA) to secure accounts and have bank-level encryption, fraud prevention, and risk reduction measures built into every layer. There are also zero consumer-facing fees.
Most importantly, digital payments improve how Gen Zers perceive a company. The same Billtrust survey found 74% of Gen Z respondents say that a business accepting new forms of digital payments has a positive impact on their perception of the company.
Digital payment methods like Pay by Bank are ideal for these young shoppers because they allow them to link their bank account and instantly transfer funds in a single click. There’s no apps to download, fees to pay, or debit/credit cards to grab. This is the fastest, most accessible method of payment, and Gen Zers understand this.
Takeaway: Of all emerging payment methods, digital payments are the most appealing to Gen Z.
While they have considerable spending power, Gen Z are known as thrifty spenders because they save about a third of their income. To satisfy the Gen Z urge to spend less, Buy Now, Pay Later payment options have emerged to allow Gen Z to make purchases without having to pay the full amount upfront.
BNPL has become a budgeting tool for consumers looking to manage their cash flow, according to experts like Charlie Youakim, CEO at Sezzle.
“Whether you have customers who are using BNPL because they need to or because they are using it for budgeting, there are multiple ways to use it, and that’s why BNPL is so successful and why it’s here to stay,” Youakim told PYMNTS’ Karen Webster in an August interview.
Takeaway: BNPL is seen as an effective budgeting tool by Gen Zers who care deeply about their financial security.
Gen Zers aren’t fans of credit cards and heavily prefer using a debit card to avoid additional fees and maintain a healthy budget.
However, Gen Z doesn’t like to take any extra steps when paying with debit. Among Billtrust’s Gen Z survey respondents, 39% considered entering a PIN to be a pain point when using a debit card.
The simplicity of tap to pay options are a good fit for Gen Z as they’re convenient, contactless, and faster.
Takeaway: To simplify the debit process and satisfy Gen Z shoppers, businesses can offer contactless debit payment options, like tap to pay.
As a leading digital payment provider, Aeropay offers reliable instant payments for in-store and e-commerce business transactions nationwide.
Businesses using Aeropay experience:
The simplicity, security, and efficiency of Aeropay make it an easy choice for your Gen Z customers—and your business.
Schedule a 15-minute demo to see our full payment solution and make bank-to-bank transfers work for your business.
We’re happy to show you our full payments solution and put the best bank-to-bank transfers to work for your business.
We’re happy to show you our full payments solution and put the best bank-to-bank transfers to work for your business.
We'll talk about your big ideas and how payments can support your vision.
We’re happy to show you our full payments solution and put the best bank-to-bank transfers to work for your business.
