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How Payment Trends Compare Between Gen Z and Millennial Consumers in 2024 and Beyond

Gen Z and MillennialsDelivering the best experiences for consumers has become fundamental to business success for your clients, often even more important than providing the lowest prices. However, determining the types of experiences customers want isn’t always a straightforward process. For example, consumers in different generational cohorts have different payment method preferences. So, as a trusted advisor guiding your customers toward the right tech choices to keep up with payment trends, you need to ask, “Who makes up your customer base?”

It’s most likely that upgrades at the point of sale need to focus on millennial and Generation Z (Gen Z) consumer preferences. Systems designed to optimize experiences for older customers probably need a refresh since millennials have surpassed baby boomers as the largest segment of the adult population in the U.S. Even more important, millennials’ buying power continues to grow. Additionally, Gen Z consumers, now starting their careers and families, are beginning to have a bigger influence on the industry.

If merchants aren’t accommodating millennials and Gen Z consumers, they are at a significant competitive disadvantage. You can help your clients operate more successfully and build stronger relationships with them if you educate them on the types of payment experiences that rising generations of consumers want.

Gen Z Consumers Lead in Digital Payment Adoption

Gen Z consumers, born between 1997 and 2012, lead in digital payments adoption. This group of consumers prefers quick, easy, seamless transactional experiences. Gen Z consumers are also three times more likely to use alternative payment methods such payment apps, and as payment apps and in-app payments than older counterparts.

In addition, Gen Z consumers tend to be less concerned with data and privacy. Only 40 percent of Gen Z consumers rank data and privacy as “extremely important” compared to 65 percent of non-Gen Z consumers. However, if merchants collect their data, Gen Z consumers want to see benefits, like personalized offers and loyalty rewards, and relevant marketing messaging.

Other factors to consider when upgrading payment solutions and technology to appeal to Gen Z include:

  • Apps for Mobile Payments: This generation is most likely to adopt payment apps, especially ones that allow for the instant transfer of funds via their mobile device.

  • Mobile Wallets and Contactless Payments: Research shows that 79 percent of Gen Z consumers are using mobile wallets in various ways. While 35 percent of Gen Z consumers use digital wallets to pay for purchases, they are also using them to pay recurring bills, transfer money between accounts, and even invest in stocks or cryptocurrencies.

  • Debit Over Credit Cards
    Gen Z values saving money and living within their means. Because of this, a differentiating payment trend for this group of consumers is that 69 percent report daily or weekly use of debit cards, compared to only 39 percent reporting frequent use of credit cards.

  • Subscriptions
    Gen Z consumers are quick to sign up for subscriptions and are least likely to be driven by subscription cost concerns, making recurring payments an important option for merchants. However, only 37 percent have maintained their subscriptions over the past year, which also shows they are apt to cancel.

Millennial Consumers Gravitate Toward Digital Interactions

While Generation Z grew up as digital natives, millennials saw the transition in digital technology. As a result, they’re more flexible, particularly more than older generations that grew up without technology altogether. Because they’re comfortable with technology, they share some similarities with Gen Z. However, there are also some critical differences that merchants that want to optimize experiences for these consumers need to accommodate:

  • Mobile Wallets and Contactless Payments: Between 2020 and 2021, adoption of contactless payments by millennial consumers rose from 10 to 29 percent–the highest increase of any generational cohort. According to a recent survey, 67 percent of millennial consumers have used a digital wallet at least once in the past year.

  • Payment Apps: While both millennial consumers and Gen Z consumers leverage apps to transfer funds/payments, PayPal is the choice application for money transactions for 70 percent of millennials.

  • Credit Cards: Millennial consumers are twice as likely to leverage credit cards for purchases and have the highest intent of all generations to splurge.

  • Emphasis on Payment Choice
    The vast majority of millennial consumers, 80 percent, will abandon purchases if their preferred payment method isn’t available. As millennials tend to have the highest percentage (25 percent) of payment diversification, using at least three different payment types, merchants must ensure they accept a range of methods.

How to Keep Up with Payment Trends for Any Customer Base

There are very few merchants that sell to consumers from only one age demographic. However, some are unintentionally driving consumers away because they only accept a limited number of payment options. With millennials now holding more buying power, and Gen Z growing stronger each year, merchants need to consider the payment trends that are driving purchasing decisions within these generational cohorts to maximize their revenues.

Help your clients understand that the key to winning consumers across the generations is offering diverse payment methods to provide the experiences everyone will love.

To learn more about a payment solution that gives your clients this flexibility, contact us.

Keep up with today's payment trends!