1.2 Open to Cryptocurrency Opportunities
1.3 Embrace Buy Now, Pay Later (BNPL)
1.4 Going Live and Video-Enabled
2.3 Digital Identity Solutions
We’ve seen rapid and ongoing changes in technology, which are now transforming the way we handle payments. Millennials and Generation Z are leading this shift, with their strong digital skills driving a preference for methods like contactless payments and cryptocurrency. Their preference for convenience and innovation isn’t just shaping their consumer behavior; it’s also inspiring the creation of new payment options.
Join FintechBuzz as we uncover the journey of how millennials and Gen Z are reshaping the future of payments with their forward-thinking approach and desire for streamlined solutions.
1. Meeting Gen Z and Millennial Payment Preferences
Gen Z and millennials have unique payment preferences that trend and appeal to their specific target audience.
1.1 Going Contactless
Nowadays, we observe that cardless and contactless payments are becoming more popular among customers. Digital wallets like Apple Pay, Google Pay, and Samsung Pay have caught millennials and Gen Z’s attention because it is easy to make purchases securely and remotely, without the need to use physical cards or any traditional payment methods.
According to a study by Mastercard, usage of contactless payments has increased by 40% worldwide. This proves that the younger generation is transitioning away from traditional payment methods and embracing the new digital approach, which is faster, more secure, and seamlessly aligned with their preferences for efficiency and convenience.
1.2 Open to Cryptocurrency Opportunities
Banking sectors are taking a growing interest in cryptocurrency investments and digital currencies because they’re facing challenges within traditional banking sectors. Their focus has shifted to millennials and Gen Z as target audience because this demographic captures a lion’s share of the market today and are more adaptive towards cryptocurrency as they find it liable and a better alternative payment method. Small and medium-sized enterprises (SMEs) and small businesses (SMBs) are also entering the cryptocurrency space alongside regulatory bodies, central banks, and platforms such as PayPal and Square that facilitate crypto transactions.
Data collected from digital sources over the past few years indicates that young people are interested in various crypto services. For instance, in 2021, there was a noticeable increase in cryptocurrency trading within the PayPal network among millennials and Gen Z. This reflects that virtual currencies are a convenient means of conducting transactions.
If we talk about PayPal, then it has attracted more millennials and Gen Z users with the introduction of cryptocurrency and features like bill splitting that seem quite appealing to younger generations.
Furthermore, PayPal is also supporting small businesses by providing timely incentives and assistance programs, which shows its commitment to empowering entrepreneurs. PayPal is also aiming to streamline business operations through its platform, which will make it accessible and user-friendly for business owners and industry leaders.
1.3 Embrace Buy Now, Pay Later (BNPL)
According to a survey conducted by The Harris Poll in 2021, over 60% of Gen Z and millennial consumers had utilized the Buy Now, Pay Later option. This data indicates a shift away from traditional credit cards toward BNPL services, which leads many to believe that credit cards are losing popularity among millennials and Gen Z because, unlike credit cards, many BNPL services don’t charge annual fees, balance transfer fees, cash advance fees, foreign transaction fees, or late fees. This makes it easier for users to manage their payments without worrying about additional charges.
Instead of relying on traditional methods, they prefer Buy Now, Pay Later (BNPL) services like those offered by Afterpay, Klarna, or Affirm. These platforms allow shoppers to pay based on their budget and in smaller installments without any added interest, which appeals greatly to younger individuals. It also helps them handle their finances and make responsible spending choices.
1.4 Going Live and Video-Enabled
Social commerce is more popular among millennials and Gen Z, mostly because of features like live streaming and videos that are part of the shopping experience on platforms like Instagram, TikTok, and Facebook. These platforms let you pay right on the spot, making shopping easy and convenient by providing a better customer experience.
Data from social media analytics highlights the impact of social media on consumers and what people buy, especially the younger generation. A report by eMarketer says that 75%–80% of millennials and Gen Z buy products directly from live streams and videos on different social media sites.
With a strong preference for authentic, organic content and a personalized shopping experience, the rise of social commerce is also evident in the shift in Gen Z’s platform usage habits. For businesses and banks, adapting to these changing trends is crucial to remaining relevant in today’s increasingly digital landscape.
2. Looking Ahead to New Payment Methods
The payment industry is rapidly evolving around technological advancements that drive innovation in convenience, security, and inclusivity. Millennials and Gen Z are seen as key drivers of these innovations, and several emerging trends in payment methods.
Let’s take a look at what the future payment industry holds for millennials and Gen Z:
2.1 Biometric Authentication
Biometric authentication, like using a fingerprint or face recognition to confirm payments, is getting really popular because it’s both smooth and secure. Gen Zs prefer it because they want their shopping experiences to be quick and safe. A study by Juniper Research says that by 2025, the use of biometric authentication will increase and consumers are expected to make payments of over $3 trillion using these features.
Nevertheless, despite the promising technological advancements and new tech prospects, industry experts express alarming concerns about the potential ramifications of biometric authentication in the fintech landscape. The pressing need to ensure financial stability and safeguard against potential risks such as system vulnerabilities, unauthorized access, and identity theft demands a balance between information security, tech innovation and overall user trust.
2.2 Blockchain Technology
Blockchain technology, the support system for cryptocurrencies, is already one of the most popular technologies in the payment industry, among others. It is perceived as one of the most powerful, technology-based tools that is changing the way consumers pay and make purchases.
We all know older generations are not very adaptive to new technologies, especially when it comes to paying for their products using any traditional payment methods. In recent years, however, we have seen younger generations to be more experimenting with and comfortable with emerging technologies. They have taken a leap from swiftly using credit cards to securely shopping and buying products using blockchain.
According to Statista, in the upcoming five years, the blockchain market could grossly exceed 39 billion dollars! This is because the financial business sector has been transforming itself a lot in recent times, and blockchain is a crucial part of that transformation process.
2.3 Digital Identity Solutions
Digital identity initiatives leveraging the latest technological trends, such as artificial intelligence, blockchain, and decentralized identifiers, are poised to not only transform how individuals authenticate their identities for financial services but also revolutionize the entire landscape of authentication. Instant market research data from data collection agencies indicates a growing demand for digital identity solutions, particularly among younger age groups seeking secure and convenient verification processes.
For instance, a poll conducted by Deloitte revealed that up to 70% of millennials and Gen Z buyers are willing to utilize digital identification for online purchases, citing concerns about the security of their personal data. With advancements in digital identity solutions, there is potential to streamline identity verification processes across various digital platforms, enabling frictionless and secure transactions.
The future of payments is marked by innovation and progress, driven by the digital literacy and savvy of millennials and Generation Z. Biometric authentication, blockchain technology, and digital identity solutions are reshaping the payment landscape, offering enhanced security, convenience, and inclusivity. Businesses that embrace these evolving trends and adopt advanced payment methods will lead the market in shaping the future of the digital economy, catering to the preferences of Gen Z consumers seeking transformative e-commerce solutions.
Conclusion
The millennials and Generation Z are the leaders who have been pushing for significant changes in the payment landscape by developing technology that is more digital, flexible, and innovative. Embracing the capabilities of cryptocurrencies for contactless payments and the innovative Buy Now, Pay Later, and social commerce concepts, the younger generations are actively altering how purchase transactions are done and completed.
Businesses today need to be adaptable and innovative in meeting these consumers’ increasingly technical and sophisticated preferences. The sooner we start to educate ourselves on these new methods of payment, the further we will come in the advancement and adoption of payment methods.
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