Z for Zoom? How a generation is driving digital payments uptake
EY’s recent blog on its Gen Z Payments Survey offers important insights for innovators hoping to capture the imagination of this increasingly powerful consumer demographic.
Reinforcing previous research by Marqeta, EY’s study confirms that Gen Zers or Zoomers are leading the way on alternative payment methods adoption - and are more relaxed about data and privacy.
With sixty-eight million members in the U.S. alone, the group is “racing ahead of Gen X, baby boomers and millennials” when it comes to using contactless, payment apps, buy-now-pay-later and in-game currencies, according to EY.
On sharing personal information, 40 per cent of Gen Zers surveyed told the global business consultancy that data and privacy were extremely important. But this rose to 65 per cent for non-Gen Z respondents.
Marqeta’s 2022 State of Consumer Money Movement report revealed how 77 per cent of Gen Zers in the U.K. felt confident enough to leave physical wallets at home and rely on their phones to make payments. It’s clear that a huge generational shift is underway.
Dynamic adopters of tech, cautious about credit
Debit trumps credit as far as payment cards favored by Gen Z are concerned, with 69 per cent reporting daily or weekly use. The group appears to have a desire to “live within its means,” avoid additional fees and build a savings pot.
EY reported that just 39 per cent of Gen Z, whose spending power is said by EY to have doubled since 2019, used credit cards frequently, as opposed to 51 per cent of older generations.
However, this “lag” could also be down to the fact that Gen Zers were “twice as likely” as non-Gen Z respondents to cite poor understanding of credit card offerings as the reason for their lower uptake.
On user journey friction, payment businesses need to be mindful that Gen Z “doesn’t like to take any extra steps” during the transaction process. More than a third of respondents believed entering a PIN was a pain point.
Perhaps unsurprisingly, the group purports to have a strong social awareness, with more than half of those surveyed saying Environmental, Social and Governance (ESG) matters when choosing a payment provider.
Yet despite its inherent dynamism, Gen Z demonstrates fierce loyalty to a preferred payment method. And when it isn’t available, it’s “twice as likely” to delay a purchase rather than turning to an alternative option.
So what does this mean for payment innovators?
EY offers three key learnings from the research.
The first is that brands should use “clear and simple” messaging around their payment methods. Whether it’s on rewards, benefits or terms of use, Gen Zers want things to be straightforward and easy to understand. That means no complex language or confusing small print.
The second learning is around UX. Gen Z expects payments to be seamless so providers need to think about removing unnecessary barriers that might slow down a transaction.
Finally, communicating with Gen Z is done via “memes, not billboards.” This generation chooses brands that align on values and that needs to be expressed via “creative campaigns” on Gen Z’s native digital channels.
To achieve success, EY recommends that brands seeking to engage Gen Z should “emphasize simplicity” and “speak to its earnest, cautious nature.”
From Marqeta’s perspective, delivering a user journey that meets Gen Z’s needs requires a set of modern tools. To find out what those are and how they can be seamlessly integrated into your business, talk to us today.
Additionally, you may find this Marqeta white paper on the importance of Gen Z useful for your payment innovation roadmap.
