by Donal McGuinness, CEO of Prommt
By 2029, 72 percent of the global workforce will be made up of Millennials and Gen Z, a substantial leap from the 52 percent recorded in 2019. As these generations gain financial independence, their economic clout will only increase, shaping the very future of payments. To meet their expectations businesses must offer multiple payment options, as 51 percent of Millennials and 48 percent of Gen Z will abandon a purchase if their preferred payment method isn’t available.
Currently worldwide, Millennials hold an impressive $2.5 trillion USD in spending power, while Gen Z commands an estimated $143 billion USD in annual purchasing power, a number predicted to soar to $2 trillion USD within the next decade. Given the low threshold for any form of friction that this cohort expects, the payment world is scrambling to stay ahead and ride this wave.
Swipe, Click, Tap: The Rise of Seamless, Digital Payments
The payment behaviours and expectations of Gen Z and Millennials are significantly different from those of older generations. When it comes to mobile commerce, 79 percent of Millennials and 72 percent of Gen Z prefer shopping online via their smartphones, in contrast to 54 percent of Generation X and 27 percent of Baby Boomers. This shift is powered by the widespread smartphone availability, inexpensive high speed data and evolving consumer expectations for seamless, on-the-go purchases.
What sets Gen Z and Millennials apart is their innate comfort with technology, coupled with a strong preference for digital and mobile payment methods. They are routinely transacting online, comfortable with 3D Secure and SCA steps (Strong Customer Authentication), and typically use a mobile banking app. Gen Z represents the highest share of consumers who exclusively use digital banking, with 60 percent indicating that they would switch financial institutions for a better mobile or digital experience. 84 percent of Millennials and 78 percent of Gen Z have connected money-related apps to their financial accounts, and 79 percent have tried a new payment method in the past year. They trust payment technology, are better able to spot fraud, and welcome innovation that facilitates frictionless payments such as embedded payment links and open banking.
Millennials and Gen Z want seamless, nearly ‘invisible’ payments effortlessly woven into their daily routines. They want the freedom to make payments at their convenience, from any location, and using any device. These generations are increasingly drawn to subscription-based models and streamlined payment processes and are shedding the use of physical cash. Gen Zers lead the charge, investing nearly twice as much in subscriptions compared to other generations, with 80 percent subscribed to four of the five essential categories, spanning video streaming, music, food, lifestyle, and more. Keeping their card details on file? It’s a natural choice.
Top three traits sought by today’s tech-savvy shoppers
- Social Media Powered Shopping: Scroll, See, Pay
The surge in social and live commerce has been nothing short of phenomenal, enabling users to discover products and make purchases in real-time, while engaging with influencers and brands on social media platforms like Instagram and TikTok.
In 2022 alone, social commerce raked in a staggering $728 billion USD revenue worldwide, and the future looks even brighter. Projections indicate a robust compound annual growth rate (CAGR) of 31.6 percent from 2023 to 2030, potentially catapulting revenues in this domain to a whopping $6.2 trillion USD by 2030.
Businesses can directly embed pay-by-link capabilities into social media apps to tap into this potential. The option to pay by card or open banking transfer in multiple currencies, enabling automatic recurring payments for memberships and events, etc. are all ways in which businesses can unlock a world of convenience for this customer cohort, leading to increased satisfaction and brand loyalty.
- Frictionless Payments
Millennials and Gen Z are hybrid shoppers who effortlessly move between physical stores, online platforms, and virtual experiences, and they expect technology to provide seamless payment options across all these channels. Slowing down the checkout process to ask for sensitive card/bank details could have a negative impact on conversion rates.
To enhance omni-channel retail experiences, merchants can adopt a payment solution that effortlessly integrates with their current ERP/POS and payment gateways. This integration empowers them to provide online personal consultations and follow up with secure, branded payment requests sent through SMS, email, WhatsApp, or web chat. This is particularly crucial for businesses that can’t readily facilitate e-commerce transactions due to the bespoke nature of their products or services. Such businesses need a solution that transforms risky and time-consuming remote transactions into secure, convenient online payments.
- Greater Control
Millennials and Gen Z not only value control over their payment methods but also over who can access their financial information. As a merchant, it is crucial to provide an incredibly user-friendly, mobile-responsive payment solution that empowers customers to take charge of their entire shopping experience.
Enabling customers to authorise and authenticate payments with a simple tap within their mobile banking app, all without having to divulge sensitive card or bank details, creates a seamless and secure native payment experience that fosters trust and a sense of control. To bolster security, robust measures like encryption and tokenisation should be in place, ensuring the utmost protection of customer data throughout the payment journey. Furthermore, clear communication of these security measures serves to build trust by assuring customers that their sensitive information is safeguarded every step of the way.
The convenience of making payments with just a click or tap, eliminating the need for physical cards or cash, is well-suited to the digital-first mindset of Millennials and Gen Z. Pay by Link solutions can be easily integrated with popular messaging and social media apps, aligning perfectly with the communication channels used by this cohort on a daily basis. The versatility and speed of such services appeal to their fast-paced, on-the-go lifestyles, making this payment solution a natural fit for their preferences and habits.