How Gen Z Prefers to Pay
When it comes to paying, Gen Z leans heavily on fast, simple, and digital methods. Here’s a breakdown of their go-to options:
Debit Cards
Debit cards are the most popular payment method for Gen Z. Around 69% use them daily or weekly. Unlike credit cards, debit cards let them spend only what they have, which aligns with their preference for living within their means. However, there’s a catch—many dislike entering PINs during transactions. Nearly 40% see this as a hassle, signalling a shift toward fully digital alternatives.
Pay by Bank
Pay by Bank is gaining traction among Gen Z. This method allows users to make payments directly from their bank accounts without needing a card. It’s quick, secure, and easy to use. In Spain, 59% of Gen Z use Pay by Bank daily or weekly. Its simplicity and lack of middleman fees appeal to a generation that values efficiency and cost savings.
Digital Wallets
Digital wallets like Apple Pay and Google Pay are also popular. These tools store payment details securely and allow users to make online and in-store purchases with minimal effort. In Germany, 25% of Gen Z reports using digital wallets weekly. Their adoption is driven by Gen Z shopping twice as much on mobile as Millennials do. This makes digital wallets a natural fit for their lifestyle. Mobile wallets, peer-to-peer apps, and buy-now-pay-later services are other key methods shaping Gen Z’s payment approach. Cryptocurrency and contactless cards are also growing in popularity, though they’re not mainstream.
Key Payment Preferences of Gen Z
To understand why Gen Z favours specific payment methods, we need to look at the traits they prioritise:
Streamlined Experience
Gen Z expects transactions to be quick and hassle-free. Steps like entering PINs or filling out forms slow them down. They’ve grown accustomed to instant interactions across apps and platforms, so anything less feels outdated. Businesses that fail to offer seamless payment processes risk losing this audience.
Digital-First Approach
For Gen Z, digital isn’t just preferred—it’s standard. Growing up with smartphones has made them comfortable with digital tools for every aspect of life, including payments. Methods like Pay by Bank and digital wallets align perfectly with this mindset.
Risk Aversion
Economic challenges like the Great Recession and the COVID-19 pandemic have shaped Gen Z’s financial behaviour. They tend to avoid debt and prefer payment methods tied to personal savings. This explains their preference for debit cards, Pay by Bank, and digital wallets over credit cards. While some digital wallets involve fees, Pay by Bank stands out for its lower costs.
Comparison with Other Generations
To put Gen Z’s habits into perspective, let’s compare them with older generations:
- Millennials: While Millennials also embrace digital payments, they’re slower to adopt newer methods like Pay by Bank. Many still rely on credit cards and traditional banking.
- Gen X: This group is more likely to use cash and checks than Gen Z. They’re comfortable with online banking but less inclined toward mobile wallets.
- Baby Boomers: Cash remains a common choice for Baby Boomers, who are generally slower to adopt new technologies.
The contrast is clear: Gen Z leads the way in adopting modern payment methods. Their reliance on smartphones and aversion to unnecessary steps set them apart from previous generations.
Why This Matters for Merchants
Understanding Gen Z’s payment preferences gives you a competitive edge. Here’s why:
Attracting Younger Customers
If your store doesn’t support digital wallets or Pay by Bank, you might miss out on Gen Z shoppers. These methods are becoming standard, and failing to offer them could drive potential customers to competitors.
Optimising for Mobile
Gen Z shops twice as much on mobile as Millennials do. To capture this audience, ensure your site is optimised for mobile payments and integrate tools that simplify checkout and reduce friction.
Building Trust
Security matters to Gen Z. Offering trusted payment options like Pay by Bank and digital wallets reassures them that their transactions are safe. This builds trust and encourages repeat purchases.
The Future of Payments
Looking ahead, digital payments will continue to dominate. Trends suggest steady growth in the use of Pay by Bank and digital wallets among younger users. Mobile wallets, in particular, are expected to become even more widespread as smartphone usage increases globally. Cryptocurrency and peer-to-peer apps may gain ground, but their adoption will depend on regulation and ease of use. For now, focusing on established methods like Pay by Bank and digital wallets will position your business well for the future.
Conclusion
Gen Z’s payment habits reflect their broader values: speed, convenience, and a digital-first mindset. Debit cards remain their top choice, but digital options like Pay by Bank and digital wallets are catching up fast. For Magento merchants, adapting to these trends is crucial. You can attract and retain this influential demographic by integrating modern payment solutions, optimising for mobile, and prioritising security.
Don’t wait until it’s too late. Start updating your payment options today to stay ahead of the curve.
Need help updating your Magento store to meet Gen Z’s expectations? Our team of eCommerce experts is here to assist. From integrating digital wallets to optimising your site for mobile, we’ll ensure your business is ready for the next generation of shoppers. Reach out to us today!
