This was a guest post by
Erin Foran, Media Relations Lead at Sezzle
Erin Foran, Media Relations Lead at Sezzle
It's never been more important for brand leaders to understand how emerging trends are driving Gen Z and Millennial shoppers to change how they think about money, finances, and payments. Today’s emerging consumers are more digitally savvy, more comfortable with shopping online, and are more concerned about their financial situation than prior generations.
Today’s consumers have access to a wide variety of payment methods to choose from when making purchases. It’s urgent for brand leaders to understand what these new consumers want when it comes to payments.
Payment technologies have become a major player in the retail experience
Combine an increasing lack of trust for banks and the exponential rise of technological advancement, and you have an evolution of payments on your hands. Even with millennials urging shopping malls into obscurity, Gen Z still appreciates the experience of in-store retail; however, when they step foot into a mall, it's not a wad of cash in their back pocket - it's a 50 GB iPhone.
Who needs a wallet when you have Apple Pay, Venmo, Cash App, Zelle… to name a few. Digital payments are in; cash is out. This new generation can go days, weeks, months even - without touching a dollar bill. The accessibility of digital payments is something this cohort has taken with stride as their new normal. Despite their youth, Gen Z is already using peer-to-peer (P2P) payments more than millennials and Gen-Xers, with 79% reporting use at least once per month.
Ten years ago, payment solutions were at the back of minds for retailers and consumers alike. The question was simple: cash, credit, or debit? Now, with rapid acceleration, payment solutions have raced to claim their spot as a priority of the entire retail experience. Shoppers are looking for the way they want to pay- whether that be Paypal, cash or another solution from the growing list of digital payments. Without much warning, payments crept up as the most crucial factor of the checkout process; which is why retailers need to act fast.
The Youngest Generations Think About Payments Differently
A shift in the evolution of payments isn’t coming - it’s here. The key to targeting these new consumers will be to evolve alongside them. Venmo introduced users to a platform they didn't yet know they needed - a combination of personal finance and social media. This app was adopted by Gen Z more heavily than any other generation, and that's because it's letting them keep track of finances while keeping up with friends.
These apps are doing so well because they disrupt the payment business and introduce the experience of payments. Payment platforms are no longer just the means to an end of the checkout process; they are connections and levers. They connect retailers to consumers on a level that payment platforms never have before. Rather than just paying with a credit card, these younger consumers are creating a relationship with payments - they are immersing themselves in the experience. Whether it be a social connection, financial knowledge, or an emotional attachment, payments have become the retail space's nucleus. This generation wants to connect to their payments in a whole new way.
The solution here will be the flexibility to accommodate this younger demographic. Whether these consumers want to be using Apple Pay, Venmo, Sezzle, or another big name in the alternative payments industry - retailers are going to need options; it's no longer a question of if, only when.
Why Have Payments Become Prioritized for Increased Conversions?
Even one year ago, digital payments did not hold the prestige they do today. Yet with the creation of a new industry, comes the need for options. Think about if you are overseas at a souvenir shop, with the perfect gift for your friend back home. Yet when you stroll up to the cashier, they don’t accept the only form of credit card you brought along on the trip. Disappointing, right? You will have to take your business elsewhere and (perhaps inadvertently) hold a slight grudge against that particular souvenir shop. The same goes for eCommerce today.
Think of it this way: by the time a prospective customer has reached the payment phase of the checkout they have already made the purchase decision. They’ve found your site, chosen a product, selected the right size and color… they’ve already done the leg work. Any friction with the payment process results in a lost sale. A customer is not a customer until they click that pay button. As an eCommerce site, you want to make clicking that button as easy as possible.
The last thing you want is to be the souvenir shop that watches shoppers walk away.
Yes, younger generations of shoppers see payments in a whole new way. They desire the connections, the flexibility, the experience that alternative payments bring. However, young and old alike - people do not like being told no. This is why payments have become the most important conversion lever in retail today. Giving shoppers the option to use the payment method they desire not only makes the checkout process smoother and abandoned cart rate lower, it opens a door to a whole new flood of consumers.
How, you ask? The relationships and experiences these new digital payments bring draw a following simply because of that - they are no longer simply a brand name. Traditional payment methods and big banks don’t connect with shoppers the way new payment methods do. Buy Now, Pay Later methods, Venmo, Cash App - these brands are all more than just a name on a card; they have mass social media followings, partnerships with financial education, merchant and celebrity endorsements and promotions. The new world of payments has created a bond with shoppers, and this bond is what creates a mass following. The connection these new forms of digital payment platforms create with their own shoppers gives you the access to their audience.
After years of playing catch-up trying to understand Millennial's minds and habits, it's officially time to call it quits. Going forward, we need to be one step ahead. Retailers should be actively comprehending the payment desires of young consumers before time flies by, and they're left in the dust. Generation Z is a cohort of consumers who desire change and have a shared determination to save the economy and environment - they are also the future of our economy. This uprising is why retailers and the consumer-facing sector have to come to them - not only meet this generation on their terms but expect what those terms could be instead of being told. The evolution of payments is only the beginning.
With COVID-19 accelerating the rise of eComm and digital payments, it is undeniable that payment methods have become a priority in the user experience. The connection and experience these platforms bring create a relationship with consumers, and with new options and relationships entering the industry swiftly - it is a non-negotiable for retailers to provide options.
The world of payments is no longer a simple "cash or credit" question; it is an entire economy. For retailers to understand and accommodate the minds of younger consumers, they will need to board the evolution of payments.