Gen Z, the "digitally native" cohort, currently makes up approximately 24% of the global population and has significant spending power. According to a 2021 Bloomberg report, students and young professionals belonging to this generation already command a disposable income of $360 billion and counting.
This figure continues to grow fast, so businesses have to make timely adjustments to their strategies to match the changing consumer preferences and remain competitive. In this overview, we’ll take a look at the current Gen Z payment trends and explain how you can adjust your operations to match the expectations of a younger audience.
The Growing Importance of Gen Z in the Payments Landscape
The term “Gen Z” refers to those born between 1997 and 2012. So, as of 2022, the representatives of this generation are aged between 10 and 25. While not all of these young people are still in full control of their finances, they are rapidly gaining more economic significance each year.
Here is why Gen Z’s role in the payments landscape is gaining prominence:
- Influencing the parents’ spending. Gen Z’s younger representatives influence the expenses of their parents, who have to take pre-teens and teenagers into account when buying groceries, clothing, and other necessities.
- Creating new trends. Most zoomers in their late teens and early 20s use social media like TikTok and Instagram, where they often influence the spending of older people by initiating viral trends.
- Entering work life. The older zoomers nowadays are graduating from college and getting their first full-time jobs. This enables them to directly influence the market with their disposable income.
As more and more zoomers come of age to get full-time jobs, their influence on the payments landscape will keep increasing. In fact, Gen Z's economic power is the fastest growing of any generational cohort thus far, with their income expected to increase fivefold by 2030 to $33 trillion. This is expected to account for over a quarter of the global income.
Shaping the Future: Gen Z Global Payment Trends
Gaining the younger customers’ loyalty requires businesses to facilitate the payment methods Gen Z representatives prefer.
Here are the main payment trends among zoomers that you should keep in mind:
- Wide adoption of P2P payments. Gen Z is actively adopting the peer-to-peer (P2P) payment option, with the US usage rising to 39% from a pre-pandemic rate of 32% in 2021. While PayPal remains the leading P2P platform across all generations, Gen Z users prefer Cash App (46%), Apple Pay (44%), and Apple Cash (27%) more than people of other age groups.
- Contactless payments are on the rise. As digital natives, members of Generation Z tend to adopt new technologies fast. This also applies to solutions for making purchases, as contactless payments and digital wallets, in particular, are very popular among zoomers. In 2021, 57% of Gen Z used digital wallets, which is up by 7% compared to 2020.
- “Yes” to livestream sales. In the US alone, the livestream market is estimated to be worth $35 billion by 2024. Some companies that conduct live video sales have reported that their share of younger consumers has increased by up to 20% over the past years.
- Strong interest in BNPL. Buy Now, Pay Later transactions are appealing to young people in the early stages of their careers because they can help them navigate their financial circumstances. However, zoomers are still cautious in adopting BNPL, with only a 7% growth in 2021 compared to 2020 (from 15% to 21%). In contrast, the usage rate among millennials has grown from 12% to 35% over the same period.
Remaining flexible and offering the payment methods that are trending among younger audiences will enable businesses to achieve higher conversions and consumer satisfaction rates in the long run.
Understanding Gen Z’s Attitude Toward Payments
Now that you know the key payment trends among the Gen Z representatives, you might be wondering: “what stands behind their attitude toward finances?”
There is a combination of characteristics that could help define the zoomers’ approach to payments, yet it is highly dependent on their age, place of residence, and other critical factors. However, the key components determining Gen Zers’ payment decisions include:
- Openness to emerging tech. Gen Z is a generation of consumers who are the most familiar with digital-first commerce and probably don't remember a world without Venmo and PayPal. This means that businesses are dealing with a cohort that has a completely different perspective on payments - people who adapt to new tech solutions enthusiastically and fast.
- Caution when it comes to finances. Many people from this generation have grown up on media sources discussing millennials’ unfavorable financial realities. Besides, they have witnessed the global pandemic putting businesses and individuals into a financially unstable state. So, while Gen Zers are open to new tech, they also tend to consider where they put their money really carefully.
- Expectation of seamless transactions. Younger consumers don’t simply value a good payment experience - they expect it. Gen Zers want businesses to provide modern and frictionless payment methods, which are almost always digital.
How to Optimize the Payment Process to Match Gen Z’s Expectations
The digital-native generation sets the bar high for the shopping experience and the process of making payments in particular. To meet these expectations, businesses must conduct ongoing market research and adapt to changes fast.
With the information provided in this overview, you will be able to introduce more payment methods that appeal to younger consumers and analyze the way they react to emerging industry trends.
What’s more, If you are looking for an advanced payment solution that will help you cater to people across generations and is easy to implement, Payneteasy can help:
- Our white label payment gateway will ensure a smooth shopping experience for your customers, optimize the transaction speed, minimize fraud risks, and boost conversions.
- Payneteasy’s Fintegrate Payment Cashier System will help you manage multiple PSPs easily and increase acceptance rates.
- You can also opt for our user-friendly SDK for mPOS & POS terminals to facilitate smooth in-store purchases.
Besides, if you have a completely unique project in mind, we are happy to offer you a tailor-made solution. Reach out to us today, and we’ll get back to you in no time!