4 ways Gen Z is defining the future of payments

When it comes to understanding payment behaviours by demographics, there’s no greater interest than in Gen Z, the first generation to grow up entirely in the digital age. Gen Z, born between 1997 and 2012, are the largest generation in Australia, making up almost a quarter of the population. 

 

As this group of digital natives enters the workforce and gains more financial independence, they are key to defining the future of payments and innovation.

 

The Gen Z approach to payments 

 

Growing up in a world where almost everything can be achieved with a smartphone in hand, it is not surprising to see Gen Zs embrace new technologies and seek instant gratification. The same applies for payments, with Gen Zs carrying out most of their banking and financial transactions online using digital and mobile channels.

 

Often ahead of the curve when it comes to fintech adoption, Gen Zs lean into products that offer greater financial freedom and control – built with sleek designs and seamless experiences. They expect payments to be instant and embedded in the websites and apps they are using, whether it is for online shopping, booking holidays, paying for transport or making investments. 

 

#1 Digital wallets

 

Mobile payments have a strong take up amongst this group, particularly digital wallets such as Apple Pay and Google Pay. According to a Savvy survey in 2022, 67% of 18-24s Australians use Apple Pay, compared to only 10% of 55-64s and 3% aged 65 and over. In the US,  57% of Gen Zs used digital wallets, with 14% of Gen Zs using three or more digital wallets.

 

Gen Zs in more mature markets such as Australia and Singapore have different payment preferences compared with emerging markets in Asia-Pacific, such as India, Malaysia and Vietnam. Whereas Australian Gen Zs prefer a combination of digital wallets and debit cards, those living in the other regions largely rely on digital wallets due to a lack of access to banking services.

 

Across Asia, Gen Zs are more prone to use superapps (such as WeChat Pay and AliPay) and micro lending apps to help them save for life events like student loans.

 

#2 Contactless payments

 

In Australia, contactless payments is becoming ubiquitous as the convenience of the tap and pay becomes a natural reflex. 

 

Gen Z is driving the adoption of contactless payments in Australia with digital wallets and debit cards. Contactless payments are faster and more secure than traditional card payments, making them a popular choice among younger consumers.

 

Another trend within contactless payments is QR codes. In 2020, the global QR codes payment market size was valued at $8.07 billion and is projected to reach $35.07 billion by 2030.

 

For merchants, contactless payments is also contributing to innovation in face-to-face payments such as the ability to turn smartphones into payment terminals with no additional hardware.

 

#3 Cryptocurrencies

 

Gen Z is also more open to using cryptocurrencies, despite it being viewed as one of the riskier assets. Crypto offers the prospect of making money quickly that overrules young people’s fears associated with its greater volatility and risk.

 

In Australia, one in four people currently own or have owned cryptocurrency in the past. In the US, 33% of Gen Zs has bought, traded, or received cryptocurrency, compared to 20% of the overall population. In comparison to other generations, the number of Gen Z crypto holders are 3.5 times more than Gen Xs and 14.3 times more than Baby Boomers. 

 

We anticipate this trend to continue as Gen Zs becomes more financially independent and invests more in digital assets.

 

#4 Alternate Payments

 

Unlike millennials and Gen Xs who grew up around traditional forms of banking such as credit cards, Gen Zs have a different experience with digital payments at the forefront.

 

With the rise of Buy Now Pay Later (BNPL) platforms, neobanks and traditional banks taking on alternate payment options, Gen Zs have a plethora of options that have seen a the decline of credit card ownership. 

 

The appeal of BNPL over credit cards is their preference for flexible, set payments that have an end date, the instant approval process and lack of interest charges. BNPL services are growing in popularity in Southeast Asia, which is expected to grow to a $92 billion industry by 2025.

 

Another way Gen Zs are changing the way they pay through popular Australian peer-to-peer payment methods like PayID and Beem It to send and receive money instantaneously without having to ask for bank account information.

 

To learn more about how Novatti can help you achieve these goals for your business, get in touch with us at [email protected]

Adel Shahin

Adel Shahin

Marketing

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