In 10 years, Gen Z will be the largest American generation and as with previous generations, product developers and marketers are tasked with determining which of their current behaviours and preferences reflect their youth and which reflect the unique attributes and characteristics of the cohort.
In the payments space, consumers have typically turned to credit cards as they age and their incomes rise. Millennials, Boomers and Seniors all migrated from debit cards - pay-as-you-go products - to credit. However, Gen Z, much more than Millennials at the same age, appears less willing to abandon debit and short-term buy-now, pay-later (BNPL) instalment loans (with low or zero percent interest rates) as their tools for purchasing and financing purchases.
The youngest adults are raising the bar for payments and financial services providers by demanding more versatile and nimble payment options and are comfortable using fintechs as providers of the products and services they use. Its members are embracing household finances management by debit card transactions as well any card product that offers cryptocurrency as either a reward or that lets them spend crypto in online or in-person transactions.
Gen Z adults have lost financial ground in the past year as real average hourly earnings decreased 3.0% from May 2021 to May 2022. That lost ground will have an ongoing impact on their incomes for the next 10 years. But while Gen Z is not as wealthy now as its members had hoped and are certainly not as wealthy as they will be in their 40s and 50s, they are the standard bearers for the services and products required from financial technology (fintech) firms, as well as traditional financial institutions.
The payment preferences they develop now will inform their choices of products and providers for years to come. Of course those preferences will morph over time, but the selections they make now will have coattails and will inform their future decisions while also swaying the payment choice of older cohorts and becoming the baseline for Gen Alpha (the generation younger than Gen Z).
“Gen Z and Payments: The Next Big Cohort Is Here” lays out the demographic characteristics of the most diverse generation in U.S. history and provides statistics and analysis of the group's current and future households, income and spending. It provides a deep dive into the emerging trends in Gen Z's relationships with financial services providers as well as their use of, and preference for, specific payment products.
The information contained in this report was obtained from primary and secondary research. Primary research included proprietary surveys from the MRI-Simmons Winter 2021-22 Survey - “Attitudes about Financial Services - Gen Z vs. Other Generations” as well as the publisher's proprietary national online consumer survey fielded in August-September 2021 that measured usage rates of consumer credit products. Both of these surveys analyze a sample size of 2,000 adults and are census representative of the primary demographic measures of age, gender, geographic region, race/ethnicity, and household income. Within the report, additional consumer surveys from other market research firms are referenced and cited as are data from payments participants.
Secondary research includes general business and trade publications, management consulting reports, investment analyst reports, company financial filings, and vendor-generated survey findings. Research also relies on U.S. governmental, non-profit, and not-for-profit trade reports, and payment system analysis.
In the payments space, consumers have typically turned to credit cards as they age and their incomes rise. Millennials, Boomers and Seniors all migrated from debit cards - pay-as-you-go products - to credit. However, Gen Z, much more than Millennials at the same age, appears less willing to abandon debit and short-term buy-now, pay-later (BNPL) instalment loans (with low or zero percent interest rates) as their tools for purchasing and financing purchases.
The youngest adults are raising the bar for payments and financial services providers by demanding more versatile and nimble payment options and are comfortable using fintechs as providers of the products and services they use. Its members are embracing household finances management by debit card transactions as well any card product that offers cryptocurrency as either a reward or that lets them spend crypto in online or in-person transactions.
Gen Z adults have lost financial ground in the past year as real average hourly earnings decreased 3.0% from May 2021 to May 2022. That lost ground will have an ongoing impact on their incomes for the next 10 years. But while Gen Z is not as wealthy now as its members had hoped and are certainly not as wealthy as they will be in their 40s and 50s, they are the standard bearers for the services and products required from financial technology (fintech) firms, as well as traditional financial institutions.
The payment preferences they develop now will inform their choices of products and providers for years to come. Of course those preferences will morph over time, but the selections they make now will have coattails and will inform their future decisions while also swaying the payment choice of older cohorts and becoming the baseline for Gen Alpha (the generation younger than Gen Z).
“Gen Z and Payments: The Next Big Cohort Is Here” lays out the demographic characteristics of the most diverse generation in U.S. history and provides statistics and analysis of the group's current and future households, income and spending. It provides a deep dive into the emerging trends in Gen Z's relationships with financial services providers as well as their use of, and preference for, specific payment products.
Report Methodology
The information contained in this report was obtained from primary and secondary research. Primary research included proprietary surveys from the MRI-Simmons Winter 2021-22 Survey - “Attitudes about Financial Services - Gen Z vs. Other Generations” as well as the publisher's proprietary national online consumer survey fielded in August-September 2021 that measured usage rates of consumer credit products. Both of these surveys analyze a sample size of 2,000 adults and are census representative of the primary demographic measures of age, gender, geographic region, race/ethnicity, and household income. Within the report, additional consumer surveys from other market research firms are referenced and cited as are data from payments participants.
Secondary research includes general business and trade publications, management consulting reports, investment analyst reports, company financial filings, and vendor-generated survey findings. Research also relies on U.S. governmental, non-profit, and not-for-profit trade reports, and payment system analysis.
Table of Contents
SCOPE AND METHODOLOGY OF REPORT
CHAPTER 1: EXECUTIVE SUMMARY
CHAPTER 2: THE GEN Z COHORT
CHAPTER 3: GEN Z AND FINANCES
CHAPTER 4: GEN Z AND FINANCIAL SERVICES
CHAPTER 5: GEN Z AND PAYMENTS
Companies Mentioned
- Visa
- Mastercard
- Apple
- Amazon
- PayPal
