Generation Z consumers in the UK are causing a generational divide when it comes to online payment preferences, seeking new ways to pay online to make the experience as seamless as possible.
That’s according to international research commissioned by Paysafe, a leading global payments provider, which found that half (50%) of Gen Z have some experience of in-app payments, while 18% make in-app payments regularly - significantly higher than all other consumers (24% and 8%).
Half of Gen Z (50%) have used a mobile wallet – versus 30% of other consumers – and 25% – versus 11% – regularly make payments with one.
Additionally, nearly a quarter of Gen Z (22%) regularly or occasionally use prepaid pins and 36% have made online purchases using a cash-based system, versus 7% and 20% of all other consumers.
The research also reveals that 48% of Gen Z buy goods on their mobile more often than any other platform. In contrast, 35% of Generation X (40-54-year-olds) and 6% of Baby Boomers (over 55-year-olds) prefer mobile shopping.
The report ‘Lost in Transaction: Gen Z expectations at the checkout’, which surveyed over 6,000 consumers in the UK, US, Canada, Germany, Austria and Bulgaria, also looked at this age group’s attitudes towards in-store payments.
The research shows that 16 – 24-year-olds enjoy having additional payment options in-store, with over half (63%) preferring to shop in stores that accept contactless payments. Physical cash is also still used by most (66%) Gen Z consumers when shopping in brick-and-mortar stores.
Gen Z is also open to using voice-activated payments. More than half would use voice technology to sign up for a subscription service such as Netflix (55%) or make a one-off entertainment purchase (54%), and 47% would be prepared to pay for groceries using voice commands to their smart fridge.
The younger generation also say they are increasingly open to cryptocurrencies. Over a third of Gen Z (36%) can see themselves using cryptocurrency to make purchases in the next two years if they knew more about it, or have already used it. Nearly a half (45%) also believe that using cryptocurrencies would be an effective way to combat card fraud, more than the average consumer.
Commenting on the research, Philip McHugh, CEO of Paysafe Group, says: “This generation is naturally more comfortable with technology but has also been exposed to a much broader set of ways to pay. Accepting new payment types and expecting lots of flexibility and ease will be table stakes going forward.”
The study comes as the British Retail Consortium (BRC) publishes its Annual Payments Survey, which reveals a higher than expected increase in non-cash payments, with retail purchases made by cards online accounting for more than 80 per cent of all retail sales. Global growth of eCommerce has contributed to the surge in the number of online shoppers, which stands at 1.3 billion people, or one quarter of the world’s population.
This move not only shows how shoppers of all ages are looking for a more seamless payment experience online and on mobile, but also that, while technology is taking speed and convenience to new heights, it is also leading to increased instances of cybercrime.
Payment service providers, online merchants and regulators face the challenge of protecting businesses and customers from fraud, without creating friction during onboarding that may lead to cart abandonment, according to Zac Cohen, general manager at Trulioo,who warns that: “Fraudsters remain on the lookout for gaps in the armour, and emerging online retailers are often the perfect target because they’re focused more on speed and user experience and less on security, making them vulnerable”.