Is Your Business Keeping Up with Gen Z’s Payment Preferences?

Imagine daily life as a 20-something consumer. Smartphone in hand, you’re equipped to buy that new pair of shoes, order groceries, and purchase trending stocks—all with a few simple swipes on your screen. Just decades ago, this would have been something out of a futuristic movie. But today, it’s the norm—and for younger consumers, it’s the only way. 

At the forefront of these demands are Generation Z—those born between 1997 and 2012. Known for their tech-savviness and influential purchasing power, Gen Z's preferences are setting a new standard in the digital payments landscape. For businesses of all shapes and sizes, understanding and adapting to these preferences is no longer a competitive advantage—it’s an expectation. In this article, we’ll dive into the ways Gen Z’s preferences are shaping the future of payments and what your business can do to prepare, covering: 

• Key trends in Gen Z’s payment preferences
• How businesses can adapt to Gen Z’s payment preferences
• Exploring payment innovation in the B2B space

Key Trends in Gen Z's Payment Preferences

Gen Zers likely can’t remember life before the Internet. Growing up with technology at their fingertips, this digitally-native generation has a hyper-connected way of living that has shaped their expectations and behaviours around digital experiences. More so than their predecessors, Gen Zers value convenience and ease, opting for shopping experiences that are as seamless as a few clicks and can be completed anytime, anywhere. 

Diving deeper, here are the Gen Z payment preferences businesses should pay attention to: 

1. They Love Alternative Payment Methods 

Gen Z leads the charge in the adoption of contactless payments, payment apps, Buy Now Pay Later (BNPL) programs, and in-game currencies. They are up to three times more likely to use these alternative payment methods compared to baby boomers, Gen X, and millennials, indicating a significant shift in the way younger people like to pay. 

2. They Don’t Deviate from What They Know

Gen Zers are fiercely loyal to their preferred payment methods—so much so, that when they aren’t available, they’re twice as likely as other generations to delay their purchase completely rather than switch to an alternative. With 77% of younger consumers admitting they’re more willing to trust businesses that offer their preferred payment options, businesses that aren’t prioritizing digital options stand to lose out on this generation’s purchasing power. On the other hand, e-commerce businesses that are implementing flexible payments experience lower cart abandonment rates and higher customer satisfaction.   

3. If It’s Not Easy to Purchase, They Simply Won’t 

For Gen Z, the payment experience must be simple and quick. About 39% of them consider entering a PIN to be a pain point, compared to just 29% of other generations. Another not-so-shocking truth? Around 25% of Gen Zers say they’re likely to abandon a checkout page if required to create an account on a retailer's website or app—about 10% higher than their millennial counterparts.

4. They Tend to ‘Buy Now, Pay Later’

The preference for BNPL programs among Gen Z grew six-fold from 2019 to 2021. This payment method, which allows consumers to break up payments over weeks or months, offers significant benefits to businesses by ensuring upfront payment and offloading the collection burden to third parties. They’re also a benefit to cost-conscious Gen Zers who are more cautious of racking up credit card debt than other generations. 

How Businesses Can Adapt to Gen Z’s Payment Preferences

Representing nearly seven million Canadian consumers—17.6% of the population—Gen Z's influence is making businesses rethink their approach to payments. Their unyielding preferences are driving the shift from traditional banking to sleek, tech-driven services. As a result, businesses are challenged not only to rethink how they structure their payment options but also how they interact with customers daily. Their willingness and ability to adapt to these expectations will determine who thrives in a marketplace where young consumer preferences are setting the standard.

Here are a few things your business can explore to kickstart transformation:

• Enhance Digital Interfaces: Since Gen Z spends a significant amount of time on their smartphones, a mobile-first approach in design will cater to their preferences for accessibility and speed.
• Integrate Flexible Payment Options: Offering a variety of payment methods, including digital wallets, contactless payments, and BNPL services, can meet Gen Z’s expectations for flexibility and convenience. 
• Simplify the Payment Process: Reduce the number of steps required to complete a transaction by simplifying account creation at checkout and offering one-tap solutions.
• Gather Feedback: Continuously collect feedback from your Gen Z consumers and adapt offerings based on this input. Regular updates based on feedback will earn their loyalty. 

Exploring Payment Innovation in the B2B Space

Gen Zers aren't just dominating the consumer-spending realm—they're also making their mark on professional purchasing decisions in the B2B space. As more Gen Z’s enter the workplace, their digital-first preferences mean that dated and clunky accounting processes are a potential deterrent to young talent. So, how can businesses adapt to meet these evolving demands?

1. Adopt Tech-First Payment Processes

Does your accounting team take months to process and pay invoices? Or are you still paying your employees with physical cheques? These are just a few examples of payment procedures that were once acceptable and are now inconvenient. Gen Z professionals expect financial transactions to keep pace with the rapid workflows they are accustomed to. Integrating popular payment networks like Prepaid Cards, Interac e-Transfer, and electronic funds transfer into your business operations can streamline payment processes and keep up with the quick turnaround times that Gen Z expects.

2. Opt for Flexible Payment Solutions

Whether it's enabling bulk transfers for large-volume payments or setting up recurring payments for ongoing services, these simple shifts that automate and streamline otherwise cumbersome tasks can make all the difference. We know Gen Z values flexibility and responsiveness—and in a world where each B2B customer prefers a different payment method, with a different financial institution, it’s important that your business makes it as simple as possible to move money quickly, securely, and in a variety of ways. 

Ready to Enter Your Digital-First Era?

Adapting to digital payment methods comes with its challenges, including keeping up with changing tech and navigating security standards and regulations. But the opportunities—like tapping into a growing market of digital-first consumers—make it all worthwhile. 

DCGroup can guide you through this transition, providing you with a menu of fast, reliable, and secure payment solutions tailored to your needs as well as your customers’. Our platform offers everything from card services to digital wallets, designed specifically to meet the demands of modern consumers (including Gen Z). When you’re ready to future-proof your payment systems, contact us to learn more.