By Johannes Kolbeinsson, CEO at PAYSTRAX
Gone are the days of traditional office jobs. The combination of a global lockdown and flexible working has motivated younger people to ditch the usual office 9-to-5. Many instead are following passion projects and side hustles.
Gen Zs are more entrepreneurial-minded than any other generation, with a Morning Consult and Samsung survey found that half of all Gen Zers are currently interested in starting their own business. With an emphasis on convenience and speed, something which they have highly driven in their own purchase behaviour, this new generation of doing business is driving new payment trends, with Buy Now, Pay Later and Apple Pay becoming two of the most popular methods today.
But much like the latest TikTok trend, the payment preferences of younger generations can change in an instant. Businesses need to be agile and responsive if they’re to succeed.
The Generation Game
From niche stores to innovative tech startups, we’re in the midst of a Gen Z business boom. Recent research has shown that the number of Gen Z directors in the UK jumped 42% in a year, with 243,000 in this age bracket now running their own businesses. Characterised by a strong entrepreneurial spirit, many members of this generation are now opting to start their own businesses rather than follow traditional career paths. Especially online – social media has opened the door to independent virtual shops and marketplaces, while bespoke retail websites can now be open for business within 24 hours.
High-profile and successful Millennial business owners such as Gymshark’s Ben Francis and Bolt’s Ryan Breslow have paved the way for the next generation to take over. Unshackled by the demands of a corporate lifestyle, this new demographic of entrepreneurs is making waves with their creativity, adaptability, and commitment to social and sustainable causes. These young entrepreneurs are also leveraging technology and digital platforms to reach global audiences and drive growth at an unprecedented pace. From TikTok shop to generative AI, they’re not afraid to chase the latest trend if it means giving them a competitive advantage.
In the consumer world, an emphasis on reducing friction at every touch point, partnered with their digital fluency, means Gen Z entrepreneurs are reshaping payments. Many are so happy with their digital wallets that they leave their physical ones behind when leaving the house, while new forms such as BNPL and virtual credit cards are also becoming the preferred methods when shopping online.
As they start to climb the job ladder and become bigger influences in the consumer world, understanding their payment preferences will be crucial for those businesses and retailers who are looking to engage with this demographic.
Meeting Payment Preferences of Gen Z
When considering Gen Z’s payment preferences, we know that they are heavily influenced by their digital upbringing and reliance on technology for everyday tasks. To cater to this demographic, you have to put yourself in their shoes. But businesses should rush to offer services like this if the benefits aren’t mutual. While recent research shows that nearly one in four Gen Z shoppers won’t make a purchase if BNPL isn’t offered, it’s now been recently scrapped by Natwest as the bank pushes to focus more on other services that, simply put, bring more money in.
In catering towards younger demographics, there are several things retailers should look for when offering payment methods:
- Frictionless payments: Some of the biggest factors that play a role in Gen Z’s choice of payment methods tend to be speed, ease of use, and integration with other digital platforms. They prioritise efficiency and simplicity, seeking frictionless transactions that can keep up with their fast-paced lifestyle. Apple Pay offers payments at the double press of a button, as well as a seamless security experience with its facial recognition technology, even when used online.
- Security: No thanks to the state of the global economy, everyone, including Gen Z prioritise protecting their hard earned money. They want the ease of frictionless payments but that should not come at the risk of losing money to fraud or theft. When considering security features such as two-factor authentication or other methods to prove the person is who they say they are, it can’t be at the expense of time and convenience, as otherwise they might just end up shopping elsewhere.
- User experience: The user experience is also key. It’s important to them that their money is safe, but it’s also important that the payment experience is smooth, and everything done from the tap of their phone. Easy access to their spending habits and help desks are just as important to the experience as everything else and this is what draws them in.
Looking ahead, the influence of Gen Z on the payments and financial industry is expected to continue growing with research showing that they will make up to 27% of the workforce by 2025. As this generation matures and gains greater purchasing power, companies will need to innovate and adapt to meet their evolving needs and preferences.
Businesses know they must adapt to Gen Z’s payment preferences to remain competitive in what is a constantly evolving marketplace. By offering flexible payment options and embracing emerging technologies, retailers can increase customer satisfaction while driving long-term loyalty among younger consumers.
