Is Generation Z shaping the future of payments?
Our latest research report, Lost in Transaction: Gen Z expectations at the checkout, takes a closer look at the attitudes and payments preferences of Generation Z. Here are our key takeaways.
1. We may be reaching a tipping point in consumers' preference for mCommerce over eCommerce
The shift away from a dependence for online shopping on a desktop or laptop device towards mCommerce has been evident for some time, but we have now reached a tipping point of adoption in younger consumers.
More than seven out of ten Gen Z (72%) and Millennial (79%) consumers regularly shop online using a smartphone, compared to 54% of Generation X and only 27% of Baby Boomers. This means that a greater percentage of Gen Z (72% vs. 68%) and Millennials (79% vs. 70%) regularly shop online using a smartphone rather than a desktop or laptop computer.
And almost half a Gen Z (47%) now shop more on a mobile device than any other technology. This is significantly higher than shop most frequently on a computer (38%), and also the percentage of other consumers that most frequently shop on mobile (32%).
2. Younger consumers are driving diversification at the checkout by demanding more payment methods
The payments ecosystem continues to fragment as preferences for alternative payments grows. This growth is being driven disproportionally by younger consumers.
When asked about their familiarity with a number of alternative payment methods Gen Z consumers consistently were more aware than the rest of the population; this includes in-app payments (84% Gen Z awareness vs. 76% for the rest of the population), mobile wallets (83% vs 82%), prepaid vouchers (61% vs. 57%), and online cash solutions (61% vs 55%).
40% of Gen Z consumers have some usage experience of in-app payments, and 15% make in-app payments regularly. This is significantly higher than all other consumers (27% of consumers have some experience, of which 9% make in-app payments regularly). Over one third of Gen Z consumers (34%) have used a mobile wallet (vs. 26% of other consumers) and 14% (vs. 10% of other consumers) make payments using a mobile wallet regularly; 29% (vs. 24% of all other consumers) have made online purchases using a cash system such as Paysafecash and 10% do so regularly (vs. 8% of other consumers; and 25% have some experience of a prepaid pin (vs. 17% of the general population) and 7% make these payments regularly (compared to 6% of other consumers).
3. Generation Z is cashless in-store, but wants to pay with cash online
Gen Z consumers have a dichotomous relationship with cash.
Although cash usage is prevalent, in-store they have a clear preference for alternative payment methods. 53% of Gen Z consumers prefer to shop in stores that accept contactless payments. This is higher than all other consumers (48%) and particularly higher than the Baby Boomers (39%). Gen Z consumers are also more aware of checkoutless stores such as Amazon Go (75%) than other consumers (70%), and a significantly higher percentage of Gen Z consumers have made a payment using this method (20% vs. 12%).
However, online Gen Z is very receptive to using cash-based solutions as an alternative to traditional card-not-present payments. Two fifths of all Gen Z consumers (40%) habitually either make purchases online using cash or a cash replacement system such as a prepaid pin, a 33% increase on the percentage of other consumers that do so regularly (30%).
4. Gen Z consumers are more positive about eCommerce innovation
In general, Gen Z consumers are much more positive about the evolution of payments technology. For example, two thirds (67%) of Gen Z consumers believe that automated payments will mean less time at the checkout and this will make shopping more enjoyable.
Also, more Gen Z consumers can see themselves using cryptocurrencies to make purchases in the next two years if they know more about them or they become more widely available (30% vs. 23%) and fewer consumers say they would never consider cryptocurrencies as a payment method (35% vs. 42%).
Younger consumers are more familiar with biometric payment authentication and more comfortable with making payments using voice-activated technology.