All You Need To Know About Gen Z Payment Preferences: One-Click Checkout, BNPL, and More
Nov 30, 2023
Generation Z is a tech-savvy audience segment who are seeking convenient payment methods with built-in seamless experiences.
This generation can’t remember a time without the internet, and tech plays a big role in the average Gen Zers’ everyday life—including how they shop.
In fact, 96% of them shop online at least once a month. With that, they are demanding better payment options that are flexible and frictionless.
Understanding and meeting their demands for convenient, frictionless payment experiences can significantly impact your ability to engage this tech savvy demographic. So, are you effectively embracing Gen Z expectations around payments?
Who is Gen Z and how do they shop?
Generation Zers are consumers who were born between 1996 and 2012. They’re the second youngest generation, following Millennials and preceding Generation Alpha.
What’s unique about Gen Zers? They're true digital natives, navigating life seamlessly in the online realm. From work and dating to building friendships and shopping, their world thrives in the digital space.
When searching for information, they often turn first to the internet, whether it’s for news or product ratings from other shoppers.
In fact, 55% of Gen Zers look to social media before making a purchase. They use their social networks to connect with their favorite brands, seek inspiration, and research products.
They also expect more from brands than previous generations. Generation Zers want brands to be authentic, transparent, and sustainable.
And because they spend a lot of time on their mobile devices, Gen Zers use diverse payment methods to make purchases such as with mobile payments and digital wallets. These payment solutions include Cash App, Venmo, and Apple Pay.
A 2022 Coresight Research survey of consumers in the US and Canada, found that more Gen Zers and Millennials used digital wallets, prepaid cards, and “buy now, pay later” (BNPL) than respondents overall. Gen Zers, along with Millennials, led the adoption of alternative payment methods (APMs).
It’s also important to note that these shoppers want a more seamless, frictionless shopping experience. About 20% of Gen Zers are likely to abandon a retailer’s or app’s checkout page if they have to create an account, while 65% of them would abandon an online checkout if their preferred payment method isn’t available.
Gen Z payment preferences
While younger consumers could use cash and teen debit cards to complete transactions, they tend to favor purchasing with alternative payments. These APMs pave ways for GenZ to interact with merchants in new ways.
Frictionless experiences
We live in a world of instant gratification. People want what they want when they want it. If they don’t get it fast enough in one place, they’ll look elsewhere for the experience they desire.
This expectation is especially true for Gen Zers, who are digital natives which means they have low tolerance for poorly functioning websites and place a higher value on seamless checkout processes.
That’s why frictionless experiences are so important. Take one-click checkout: Enter your personal details once and breeze through checkout every time after. Returning shoppers can complete their purchase in just one click, avoiding the hassle of re-entering the same information and navigating lengthy forms repeatedly.
Other examples of frictionless experiences include:
- Online order tracking, from start to finish, and same day delivery
- A well-designed, user-friendly website with easy navigation
- Guest checkout options (allow customers to make purchases online without creating an account)
- Autofill options for shipping and payment information
- Multiple payment options, including credit/debit cards, digital wallets, and PayPal
Implementing any of these frictionless experiences on your website makes for happier customers who can buy without any hassle. In turn, this reduces the chances of Gen Zers abandoning their carts.
Buy Now, Pay Later
Gen Z payment preferences differ a lot from those of earlier generations. While Gen Xers and Millennials might stick to traditional online payment methods, Gen Z craves speed and convenience.
It should come as no surprise that younger consumers prefer “Buy Now, Pay Later” options, allowing them the flexibility to get what they want now and pay over time.
According to Finder, 50% of Gen Zers and 54% of Millennials have embraced Buy Now, Pay Later (BNPL) methods. During COVID-19, C+R Research found clothing to be the most common category for BNPL purchases However, it’s not just fashion – electronics, furniture, appliances, and housewares are also popular products purchased using this method
While some might argue that credit cards offer similar convenience, they do come with limitations.
Since credit cards require established credit history to get a credit card, Gen Zers might not have access to them. Even if they obtain a credit card, they’d typically incur interest on unpaid balances, with late payments potentially damaging their credit score.
On the other hand, BNPL solutions like Klarna or Afterpay present a hassle-free payment alternative. These options give Gen Zers more purchasing power by splitting payments over several weeks or months without the burden of immediate payments.
Here’s an example of Nike offering Klarna as a BNPL solution.
Digital-first buyers also prioritize immediate transactions and the freedom to decide without limiting conditions. BNPL offers this option, granting customers the flexibility to pay for products gradually, often without interest or a credit check.
PayPal and other apps
Convenience is a widespread theme in retail that’s not limited to just GenZ customers
Simplifying the payment process is vital as people prefer quick transactions with minimal hassle. If they can checkout in just a few clicks, they’re more likely to go through with the purchase and return for future transactions.
Apps like PayPal, Cash App, Zelle, and others cater to Gen Z’s desire, influencing how this tech-savvy generation handles transactions.
Brands like LeatherCult understand the importance of offering PayPal as a checkout option. It aligns with the generation’s preference for swift and reliable payment methods, enhancing the overall shopping experience.
Cash App which started out as a peer-to-peer payment (P2P) platform that allowed people to quickly send, receive and invest money quickly became one of GenZ’s preferred mobile banking and payment tools because of its intuitive interface and social payment features.
Now, Cash App has evolved into a widespread payment solution, serving millions of merchants and allowong consumers to shop at some of their favorite brands effortlessly.
Venmo and Zelle are other convenient payment options often used by the Gen Z audience. Venmooffers built-in social features, allowing users to interact with each other, introducing a social aspect of paying. Zelle allows users to quickly and conveniently transfer money.
What makes Zelle stand out from other P2P platforms is the ability to transfer money to anyone with a bank account at a participating financial institution. Other solutions like Cash App, Venmo, and PayPal require people to use its native platform to send or receive money.
PayPal, with its global reach, remains a trusted choice for people worldwide. It’s integrated into hundreds of thousands of ecommerce websites, offering an express checkout option that caters to the need for convenience and security.
Digital wallets
Digital wallets add even more convenience to the payment landscape. In 2021, 57% of Gen Zers used digital wallets, a number that surged to 66% in 2022.
With solutions like Apple Pay, Google Pay, and Samsung Pay, customers can go into a store and make a purchase without having to swipe a credit or debit card.
For instance, YUPLAY, a PC games seller, offers various payment options including credit cards, Google Pay, and Apple Pay for purchasing Fortnite items like the catwoman's grappling claw pickaxe.
In addition to speed and efficiency, digital wallets also bring security to payments. That’s because they use tokenization to hide bank and credit card information made possible by attaching a random identification number, or token, to each purchase.
Many online merchants are starting to accept digital wallet payments. This includes retailers, restaurants, grocery stores, gas stations, and websites, and apps.
Cryptocurrencies
Younger consumers want financial autonomy and transparency. And a lot of them look to cryptocurrency to achieve this.
Why? Cryptocurrencies offer decentralized and borderless transactions. This gives people more control over their financial assets without the need for intermediaries like traditional banks.
Plus, blockchain technology is transparent and immutable. This appeals to younger consumers like Gen Zers, who value greater visibility and security in their financial transactions.
That’s why 33% of Gen Zers have bought, traded, or received cryptocurrency, compared to 20% of the overall population. And 94% of crypto buyers are Gen Z or Millennials.
Because many Gen Zers own cryptocurrency, it only makes sense for banks and merchants to offer crypto wallets, crypto payment options, and investment products.
Budget travel agency, CheapAir has been an early adopter of cryptocurrencies, accepting Bitcoin as far back as 2013. When paying for your flight, you would be able to use more than 15 cryptocurrencies to pay for it.
As more Gen Zers buy into crypto, it also marks a need for seamless integration of cryptocurrencies with traditional banking services. As a result, users can buy, sell, or transfer digital assets through their existing bank. That way, they can manage their investments all in one place.
The bottom line
Tech-savvy, digital-first buyers like Gen Z consumers look to the internet for pretty much all aspects of their lives. WIth those changing consumer habits require But, providing all of these options for payments can also create decision fatigue.
Consider investing in technology like Bolt with one-click checkout, passwordless login, and one-click account creation.
Keep in mind: Gen Z engages in social commerce to research products, get inspiration from influencers, and ask for advice before making a purchase. 40% of Gen Zers use social media like Tik Tok or Instagram for product reviews instead of Google.
So, providing user-friendly payment methods that are fast, secure, and easily accessible caters to their digital-first lifestyles. It’s why frictionless experiences like one-click checkout are so important.
Try Bolt today to offer your customers a seamless checkout that’s faster than they can say ’one-click.’