01Apr, 2018

Payment Solutions

How Generation Z will dictate the future of payments

Today, Generation Z are just teens and young adults. But by 2020, as they enter the workforce – their habits, preferences and understanding of the internet of things will change the future of payments.

Generation Z are those consumers born between 1996 and 2010 – who’ve followed the Millennials (born between 1982 and 2004), Generation X (born between 1965 and 1983) and the Baby Boomers (born between 1946 and 1964).

Generation Z were only toddlers when the dot-com bubble burst in 2001 and hadn’t reached their teenage years when the global financial crisis hit in 2007. In terms of technology, they’ve likely only ever had access to smartphones with 4G data speed, allowing them to communicate using Facetime, share video content via Snapchat and have access to banking and online shopping in the palm of their hands. They have a different perspective regarding the use of data online and expectation of ‘real-time’ performance than other generations.

Generation Z are considered digital natives. They have never known a world without social media. They’ve grown up with Google, Apple and Facebook. In fact, 92% of Generation Z have a digital footprint. Their world is on-demand: a world of continuous updates, of digital disruption and the ability to know what is happening and where it is happening at a moment’s notice.

Generation Z are more entrepreneurial than other generations

Generation Z’s exposure to technology and more specifically digital disruption has resulted in them thinking and acting more entrepreneurial than other generations. Their career aspirations are also different, with research conducted in the US* indicating that 72% of Generation Z teenagers aspire to start a business one day.

This article in the Harvard Business Review discusses this very fact. It highlights that Generation Z no longer look for what we could call “traditional” teenage jobs like working at McDonald’s, waiting tables or manual labour. They now have jobs that make them best described as self-employed. That includes selling products on eBay or offering child care or tutoring.

Generation Z has also been exposed to and is more aware of the success achieved by technology entrepreneurs. The well-publicised success of tech entrepreneurs like Mark Zuckerberg (Facebook), and Evan Spiegel (Snapchat) and TV shows like Shark Tank demonstrate the possibilities to Generation Z of entrepreneurship. They now aspire to be the boss and start their own businesses.

This entrepreneurial thinking makes them naturally question the status quo. Gen Z don’t see limitations in new ideas and see technology as the great enabler, not a limiter. When it comes to payments, they will move away from brands that don’t keep pace with their need for on-demand, highly personalised experiences.

Generation Z gravitate to mobile banking apps and technology

Generation Z are big users of mobile banking apps with 69% of them using them daily or weekly. This is compared to 17% usage with Baby Boomers.

Of all the generations, they are the most comfortable using technology for financial transactions.

In 2017, they had the highest frequency of mobile payment usage with 45% compared to Millenials at 42%, 41% for Generation X and 38% for Baby Boomers.

They are also more likely to use payment technology that allows them to share or split purchases with friends. Gen Z are also more likely (58%) to make a spontaneous purchase and payment on their mobile device (compared with 51% of Millennials, 36% of Gen X and 37% of Baby Boomers). This preference for mobile technology is supported by their brand preference for Apple Watches, which demonstrates their comfort with wearables and the role they play in mobile payments.

Generation Z demand a friction-free, personalised mobile payment experience

As the most digitally savvy generation, Generation Z demand to be continuously connected, and to be able to buy immediately through a seamless mobile payment experience.

According to the 2017 PayPal mCommerce Index, Gen Z are more likely than older generations to abandon a purchase or payment on mobile if the payment takes too long. A negative experience with payments will affect customer loyalty and the potential for a repeat purchase.

This high demand for mobile payment options will only become more important as a bigger share of Gen Z enters the workforce and their level of spending increases. Seamless and personalised payment options must become a priority if businesses want to be where their customers are online or on their mobiles.

Flexible, real-time payments are the expectation, not the exception

Generation Z live in an on-demand world. Secure, immediate payments are the expectation, not the exception.

Previous generations tolerated poor user and design experiences, payment transactions that are processed, cleared and settled over a number of days. But now, businesses that use payment infrastructure that doesn’t support the implementation of a seamless, real-time payments capability will get crushed by their competition.

This expectation makes it an imperative for businesses to modernise their payment systems. Any business sticking with inflexible payment systems that don’t meet the customer’s need for quality speed and functionality will be left behind. Payment technology of tomorrow demands greater flexibility, card data security and the agility to change according to customer needs at short notice.

Generation Z is just the start

While the name of the generation following Gen Z is yet to be coined, we can only assume that technology will be the driver of change for digital payments. Customers will continue to reward those that adapt and ignore those that maintain the status quo.

As payments services evolve, those leading the evolutionary process with security, functionality, flexibility and innovation go hand-in-hand. Organisations must anticipate what is next. They must be ready and capable of adapting to remain relevant.

IPSI’s Enterprise Payment Solutions are designed to meet the changing expectations of Generation Z and support flexibility, agility and security required in the digital economy.  To see how we can help, call us on 1300 975 630 or fill out our contact form and we will be in touch.



  • 2017 PayPal mCommerce Index
  • Johnson, Whitney. Why today’s teens are more entrepreneurial than their parents. Harvard Business Review.
  • Accenture Consulting, Driving the future of payments: 10 Mega Trends
  • Gramiga, Kristen. Know your customers: How different demographics prefer to pay.

Related Articles

The benefits of mandatory data breach notification laws in Australia

Mandatory data breach notification laws would result in greater security for Australians and improved protection of their sensitive information. And i

Read More

Cost of data breach report (with Australian Statistics)

Ponemon Institute 2013 Cost of Data Breach report The 2013 Cost of Data Breach report published by the Ponemon Institute (sponsored by Symantec) revea

Read More

How to survive a data breach

In the past two years, LinkedIn, eHarmony, Twitter, Adobe and, most recently, Target have suffered data breaches that together exposed more than 120 m

Read More

Credit card data discovery tools lay the foundation for good data security

Card Holder Data (CHD) discovery tools are becoming essential in identifying none secure sensitive data locations. Since December 2013, a series of da

Read More