According to Pew Research, Gen Z is anyone born between 1997-2012. Gen Z is the generation that comes after Millennials (1981-1996). Morgan Stanley estimates that Gen Z will be the largest generation by 2034, at just under 80 million. Such a young generation has the potential to echo the effects of the Baby Boomers in their heyday.
The first Gen Z'ers are finishing college and are already starting to influence the payments marketplace. It's important to understand how their spending habits and payment preferences will affect the overall payment space.
Gen Z was entering the economy just as it was entering a pandemic. Digital is their primary method of communication and payment, much of this influenced by pandemic restrictions. It also means they demand fast, secure, and reliable payment methods. As well, they are also very skeptical about about payment security.
Gen Z's spending habits are similar to that of Millennials. Both have a preference for customized services and experiences. This means spending on eating out, mobile devices, transportation, and housing.
While Gen Z prefers digital shopping, NRF/IBM found that 98% of them still shop in physical stores some or most of the time. Just don't expect them to pay with cash or physical checks.
It's estimated that this generation uses money transfer apps, such as Venmo or Zelle, at least once a month. They also learn to use social media before they're old enough to drive or open a bank account. That can present communication challenges for companies that haven't quite figured out their digital outreach and communications strategies.
Gen Z's digital preferences mean contactless payments are of primary concern. Since this group does shop at physical stores, some also prefer curbside pickup. For merchants, they'll need a mobile digital payment method, physical product tracking, and customer arrival notification abilities.
Merchants who embrace digital communication (especially on social media), many forms of digital payment, and contactless curbside pickup will be ahead of the competition in supporting Gen Z customers.
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