Gen Z not only possesses increasing spending power, but this demographic—raised in a digital environment—is vocal about their payment preferences. Younger consumers are more inclined to explore and adopt alternative payment methods, such as contactless payments or buy now, pay later services, in comparison to older cohorts.

Data from EY reveals that seamless experiences matter greatly to Gen Z. Even a single unnecessary step during the payment process leaves them dissatisfied. This extends to tasks like entering a PIN at the point-of-sale, with 39% of Gen Z respondents citing it as a pain point when using their debit card. In contrast, fewer (29%) older generations express the same sentiment.

When choosing between debit and credit cards, debit cards reign supreme among Gen Z consumers, with nearly 70% of respondents in this age group saying they use their debit cards on a weekly basis. The appeal of debit cards lies in their budget-conscious nature. According to EY, Gen Z is mindful of their spending and aims to not overspend, particularly to avoid late fees or other charges commonly associated with credit purchases. Although 51% of older generations report frequent credit card usage, fewer Gen Z consumers (39%) do.

Ultimately, loyalty plays a significant role. Gen Z consumers are decisive about their preferences, and if they don’t find what they seek, they’ll seek it elsewhere. In terms of payments, they have specific preferences, and if their preferred method isn’t available, they are more likely to delay the purchase rather than opt for an alternative payment method.

The Differences Among Generations

PSCU’s 2023 Eye on Payments research mirrors EY’s findings, indicating that Gen Z is embracing emerging payment technologies, especially mobile wallets.

“Nearly four in 10 respondents say they like to use a mobile wallet at the point of sale or when paying for something at a retail location,” said Tom Pierce, Chief Marketing Officer at PSCU during a PaymentsJournal podcast last year. “And particularly in the younger audience, at least 28% of older Millennials, younger Millennials, and Gen Zers say they like to use a mobile wallet a few times a week at the point of sale.”

In contrast, older consumers exhibit less enthusiasm for new payment methods and tend to stick with traditional payment methods. Unsurprisingly, PSCU’s research revealed that 96% of baby boomers prefer to pay via debit, credit, and cash.

Paying Bills Looks Different for this Generation Too

Gen Z’s payment preferences aren’t the only distinguishing factors setting them apart from older generations. This group also approaches the bill payment process differently. In fact, no generation experiences more stress about paying bills than Gen Z, according to data from ACI Worldwide. During a podcast early last year, Steve Mountz, Director of Product Marketing at ACI Worldwide told PaymentsJournal:

“When we asked consumers how they feel about the bill payment process, 31% of Gen Z found the bill payment experience stressful either always or most of the time,” Mountz said. “What’s more, 34% said they were nervous about whether or not they’re able to remember to pay their bills, and 49% said they get anxious. So, they’re generally stressed, anxious, and worried about whether they can cover their bills or pay them on time. We also see a high preference for in-person payments, which was kind of a surprise.”

“Maybe they’re making a huge tuition payment, and they have questions they want to ask before submitting it,” he said. “So they make those payments in person. We also see a lot of times that they want to pay in person at a third party like a Walmart or a Walgreens.”

Increased Spending Power

Given Gen Z’s substantial and growing spending power, businesses—particularly retailers and merchants—should take note. They need to make sure their point-of-sale terminals are equipped to handle diverse payment methods. Gen Z, having grown up with alternative payment methods expect nothing less.

While this may not significantly alter the landscape for online retailers, those with a physical presence need to prioritize the adoption of mobile point-of-sale technology and other innovative checkout solutions to streamline the checkout process. If businesses don’t adapt to the evolving payment preferences of Gen Z consumers, they won’t remain competitive nor meet consumer expectations. EY also recommends that payment providers streamline the checkout experience and remove any extra septs from the transaction experience.

The post How Gen Z Is Redefining the Payments Landscape appeared first on PaymentsJournal.

A recently released Javelin Strategy & Research report, Meet Gen X, The Little Demographic That Doesn’t, takes a broad-based look at the smallest U.S. generation and drills down on a handful of financial factors working against its members, who are now 43 to 58 years old:

• Gen Xers are being crunched from above and below, by the needs of aging parents who, in many cases, require caregiving and children who are equally likely to be older and younger than 18.
• Pessimism about being able to pay off student loans that is striking compared with the sentiment of Generation Y, the bloc following Gen X.
• Rampant doubt about being on track for retirement.

I felt every statistic. I am Generation X.

How are you doing?

The Middle Child of Generations

Painting a picture of Gen X required equal parts demographic data, behavioral tendencies, and the proprietary research for which Javelin is known.

We love nostalgia. Come along on a hunt for vintage vinyl sometime, or hang out with me and my buddies when we get to riffing on films like “Fast Times at Ridgemont High” or “The Breakfast Club.”

We are, in many respects, what you would expect to see in this stage of life. We have homes and marriages/domestic partnerships, and we’re building careers (or close to finishing them) and families.

Perhaps most notably, we are small in number. The Baby Boomers vastly outnumber us. Millennials, too. And Gen Z? Don’t get me started. We’re like the greasers in “The Outsiders” having crossed the socs. (I told you we love nostalgia.)

That aspect—being outnumbered by our elders and our youngers—creates a sense of invisibility in a financial services market that is, on some level, a numbers game. While marketers and product makers pine for the attentions of Marcia, Marcia, Marcia, we Gen Xers are over here like Jan Brady, wishing George Glass were real.

What’s to Come

“For reasons both explicable and debatable, Xers complained less pedantically than the demographic they followed and less vehemently than the demographic that came next.”—Chuck Klosterman, “The Nineties.”

When I was 23, I said something like this: “As long as I can keep myself stocked in pizza and compact discs, I’m good.” It was the perfectly cynical utterance from the denizen of a perfectly cynical generation. I haven’t been 23 in a long, long time, and I’d have done better to note how few doubling opportunities there would be in my financial life.

In other words, it’s amazing how early the night falls.

Gen X, an odd little generation, needs advice and financial products that speak to it. Meet Gen X, The Little Demographic That Doesn’t gets at that need and offers some recommendations for delivering solutions. A later report will delve even deeper into Gen X’s financial behaviors, fears, and motivations.

In the meantime, if you’d like to discuss this or any other topic across our wide range of expertise, Javelin’s advisory services stand ready to engage.

Overview by Craig Lancaster, Analyst/Content Specialist, Financial Services and Payments at Javelin Strategy & Research.

The post In the Barrel With Generation X appeared first on PaymentsJournal.