Gen Z and Millennial Preferences and Behaviors Drive Popularity of Payments

By Tom Pierce, Chief Marketing and Communications Officer, Velera

Payment preferences continue to evolve and younger generations — those consumers ages 18-43 — are reshaping the payments landscape with their expectations. Velera’s 2024 Eye on Payments study, released annually since 2018, gauges the current state of payment preferences for 1,850 credit union members and other financial institution customers (“non-members”).

Results of this year’s study found that most consumers now favor credit cards over debit as their preferred payment method. Alternative digital payment methods — such as mobile wallets, peer-to-peer (P2P) payments and Buy Now, Pay Later (BNPL) options — are also increasing in popularity, especially amongst Gen Z, Younger Millennials and Older Millennials.

Here are some additional key generational findings from this year’s study:

Baby Boomers (Boomer+)
Despite concern about the economy, Boomer+ consumers, ages 60 and above, feel more secure about their personal finances than the younger generations. Their first preferred payment method is debit (43%) and they have a lower reliance on revolving credit, with only 8% having applied for a credit card in the last year, which is logical, given their position on the age spectrum.

  • Takeaways: To ensure these members feel supported and secure in their financial decisions, credit unions should provide a blend of trusted digital tools and traditional in-branch services. With fewer major life changes, Boomer+ consumers benefit from personalized financial solutions like investment products geared toward income generation and preservation of wealth. 

Generation X
Gen X (ages 44-59) are slowly embracing digital payment technologies, with almost half (46%) using a mobile wallet at least a few times per month. Debit is their preferred payment method (45%) for the majority of their transactions. Thirty-nine percent of Gen X like to interact with their credit union through a mobile app, more than any other generation. They are open to using mobile solutions from a trusted financial institution.

  • Takeaways: Despite their interest in interacting with their credit union through a mobile app, there is still room for further mobile wallet adoption for Gen X when it comes to payments. Credit unions can educate members on how to integrate a mobile wallet into their everyday financial routine — emphasizing that their preferred debit card can be used within the wallet..

Older Millennials
This generational cohort (ages 36-43) is financially savvy and has a flexible approach to managing money. They were early adopters of cryptocurrency, with 72% have invested or are currently holding cryptocurrency. However, despite being comfortable with digital and decentralized currency, they still have an interest in cold hard cash – with 34% of Older Millennials using an ATM a few times per week for cash withdrawal (58%) and cash deposit (42%).

  • Takeaways: Credit unions should consider offering resources or services to support Older Millennials’ interest and investment with cryptocurrency. As this generation relies heavily on ATMs for cash withdrawals and deposits, credit unions should ensure their ATM networks are robust and surcharge-free.

Younger Millennials
Younger Millennials (ages 28-35) are very tech-savvy and embrace the convenience and flexibility of alternative payment methods. This cohort uses mobile wallet technology more frequently than any other generation, with 51% using the technology at least a few times per week. These young consumers are also the most frequent users of P2P payment accounts like Zelle and Venmo, with 78% relying on them regularly. Younger Millennials also lead the way in contactless card usage and are avid adopters of newer payment methods like QR codes, social media apps and text payments.

  • Takeaways: These consumers prioritize convenience. Credit unions should offer a full host of seamless, secure digital payment solutions and promote them effectively to this audience. Many Younger Millennials prefer to contact their financial institution through social media, so offering real-time support through those platforms can enhance engagement and strengthen relationships with these digitally connected members.

Generation Z
Gen Z, or consumers between the ages of 18 and 27, are heavily shaping the way we think about money and technology. More than half (58%) pay through social media apps and four in ten (40%) have paid through a QR code. Most (86%) of this generation prefer to use a credit card to build their credit, with more than half (51%) applying for a credit card within the past year. Gen Z also favors flexible payment arrangements, with almost 70% likely or extremely likely to opt for a BNPL option.

  • Takeaways: This cohort is the most important generation for credit unions to consider and engage with to drive future growth and remain competitive. Credit unions should promote products that help this generation build credit while offering flexible payment arrangements. Be sure to develop financial education campaigns focused on responsible credit use and savings, to ensure that their Gen Z members don’t get under water as they look to build their credit for the future. Credit unions should also offer robust member support through instant messaging, chatbots or in-app communication tools to ensure a frictionless experience that meets Gen Z’s demand for immediate service.

Enhancing member experiences and investing in mobile and digital solutions are crucial areas of focus needed for credit unions to stay competitive in a rapidly shifting payments environment. Consider partnering with a fintech credit union service organization (CUSO), like Velera, that can help expand and elevate your credit union’s offerings to meet the needs and expectations of Gen Z and Millennials — the future of payments.

Discover more key findings and takeaways for your credit union to leverage in order to effectively market to members and achieve continual growth and success. Download the full 2024 Eye on Payments study today.

To learn more about Velera and the solutions they offer, connect with the GoWest Solutions Team today.

 

In his role as SVP, Chief Marketing & Communications Officer, Tom Pierce is responsible for leading and executing Velera’s marketing and communications strategy, including brand development and sentiment, public relations, go-to-market strategy, market research and events. Pierce has successfully led marketing teams for more than 30 years, with the latter half of his career spent in the payments industry. Prior to joining Velera, Pierce served as Chief Marketing Officer for Cardtronics, the largest global ATM operator, and held senior marketing roles at FIS, Metavante and Wausau Financial Systems.

Posted in GoWest Solutions, Top Headlines.