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Gen Z, or the iGeneration, values convenience, speed, and security in their payment methods. As they gain financial independence and spending power, their choices will influence the next few decades of payments innovation.
Gen Z, also known as the iGeneration is the demographic group following the Millennials. Born between 1997 and 2012, this generation is the first to have grown up entirely in the 21st century and has had access to technology and the internet from a very young age. As a result, they have a unique relationship with technology and are often considered to be the most tech-savvy generation yet.
When it comes to payment trends, Gen Z has a strong preference for digital and mobile payments. This is largely due to their comfort with technology and their desire for convenience and speed. They are also more likely to be skeptical of traditional financial institutions and therefore inclined to trust technology companies and digital platforms more.
More than a half of Gen Zers do not have a personal or parent-opened bank account. In the past, this would have limited their involvement in trade and commerce. However, the use of mobile wallets, which are often provided by non-financial institutions, such as telecom companies, has now introduced an alternative solution for this demographic group. The FIS Pace survey showed that 57% of Gen Z owned mobile wallets in Q1 of 2021 versus 50% during the same period in 2020.
Gen Zers are drawn to the decentralised nature and anonymity of cryptocurrencies, which is important to them as they are a generation that values privacy. While cryptocurrencies are still much more popular among millennials, we can see the Gen Zs actively catching up to them: in 2021 13% of Gen Z owned cryptocurrency and this number grew to 17.40% in 2022.
Gen Z is also more likely to use subscription-based payment models, not only for digital goods like Netflix or Spotify but also for food. Gen Zers are comfortable with the idea of paying for access to a service or product on a recurring basis. Gen Zers, in particular, spent nearly twice as much on subscriptions compared to all the other generations, while at least 80% of them had subscriptions in four of the five essential subscription categories (video streaming, music, miscellaneous, e.g., VPN, food, beauty and wellness).
In conclusion, Gen Z is a generation that values convenience, speed, and security in their payment methods. They are comfortable with technology and have a strong preference for digital and mobile payments. Their tendency to choose subscription models and get rid of cash is showing that Gen Zers want to make payments seamless and almost ‘invisible’ in their daily lives.
A study by PPRO showed that 48% of Gen Zers will abandon a purchase if their favorite payment method isn’t available. This is why payment sector professionals and businesses need to offer the most relevant forms of payments. As this generation enters the workforce and becomes more financially independent, their spending power and influence will only continue to grow and their preferences will continue to shape the future of payments.
Irene Skrynova is the chief customer officer at Unlimint.