Gen Z and the future of payment preferences

There are 68.6 million Gen Zers in the U.S. Is your business doing everything it can to leverage Gen Z payment preferences?

Meet the newest class of influential consumers: Generation Z. Born between 1997 and 2012, Gen Z is the hyper-connected, digitally native generation that could shape the future of retail.

Known for their technological proficiency, many Gen Zers can’t recall a time without the Internet — a striking difference between this generation and their predecessors. Technology has a big impact on the average Gen Zer’s daily life, and could influence everything from the way they learn to the way they shop.

With 68.6 million “Zoomers” in the U.S. alone,1 large enterprises like yours should start thinking about how to best appeal to Gen Z payment preferences and trends — or you could potentially miss out on millions of transactions. Let’s explore why payment options matter to younger customers and which methods you should incorporate into your checkout process.

Who is Gen Z and how do they shop?

Pragmatic and well-informed, Gen Z values their independence and freedom to make their own choices. These tendencies may also impact the way this generation shops.

Gen Z customers like to shop both online and in-store, giving them a variety of options to choose from.2 They also prefer to have options when it comes to payment methods, and may have a penchant for digital payments. Furthermore, 77% of younger consumers are more likely to trust businesses that offer their preferred payment methods.3

To prepare for this change, forward-thinking businesses like yours can start to integrate Gen Z payment preferences.

What payment apps do Gen Z have on their phones?

While the shift toward digital payment methods has been underway for quite some time, the last few years have seen growth in online shopping and contactless payments. Gen Z is at the top of this trend, embracing buy now, pay later (BNPL), peer-to-peer (P2P) payment apps, and digital wallets.4 With many of these payment methods available directly through applications on their smartphones, Gen Z is leading the way toward more digital payments in the future.

Gen Z payment preferences

Technologically savvy Gen Z customers appear to prefer convenient payment methods with built-in seamless experiences. Learn more about Gen Z payment trends and how you can respond to changing demand.

Buy now, pay later

Buy now, pay later gives customers more flexibility by breaking up payments over weeks or months — and it has many benefits for your business. With this payment method, you can get paid up front and leave the collection of payment to a third party. By alleviating this burden, you can focus on other business priorities.

BNPL can be a good way to increase your reach among younger demographics: Three-fourths of buy now, pay later users in the U.S. are Gen Z or millennials.5 Because BNPL is such a popular Gen Z payment preference, it may also help your business earn their loyalty: 65% of Gen Z BNPL customers are repeat users.6

BNPL may also help drive conversion. When shopping, 76% of younger BNPL users agree that a pay-over-time message encourages them to make a purchase.3 And 53% of millennial and Gen Z BNPL users have abandoned a purchase because they didn’t see a buy now, pay later option.7

Millennial and Gen Z payment surveys indicate that younger customers may like BNPL because it helps ease shopping stress: 76% of millennial and Gen Z BNPL users see it as a way to buy what they need without waiting.3 In an uncertain economic climate, BNPL may give these customers the flexibility and confidence to purchase the essentials, instead of going without.

Some Gen Zers also feel that BNPL helps with money management, with 76% of millennial and Gen Z BNPL users saying it helps them budget and manage their cash flow.3 Interest-free installment options, in particular, may be more attractive to this generation due to their predictable payment schedule.


Venmo started as a peer-to-peer (P2P) payment platform that allowed users to easily split fees and send money to their connections. Today, Venmo has expanded its functionality and can now be used during the checkout process at more than 2 million merchants.8 With a user share of 34%, Venmo is the second most-used payment service in the U.S.9

Adding Venmo as a checkout option may offer valuable benefits to your business. Much like PayPal, Venmo offers a seamless, streamlined checkout experience in-app, online, or in-store. This experience may help you reach mobile and social customers who make purchases directly from an app or online.

Diversifying your accepted payment methods with Venmo may give you the ability to capture a younger generation of customers. Research shows that 28% of Venmo users in the U.S. are between the ages of 18 and 29 years old.10

PayPal can give you access to Venmo along with other popular payment methods. Stop missing out on reaching Venmo’s almost 90 million active accounts11 by offering this Gen Z payment preference.

Digital wallets

Digital wallets are a convenient way for customers to complete purchases online or in-store without a physical card. To use a digital wallet online, customers simply choose their preferred digital wallet and verify their identity using a secure portal. In person, customers can use a mobile app to verify their identity and complete a purchase by scanning a code or tapping their phone on a terminal.

Digital wallets are a growing Gen Z payment trend. Customers may value digital wallets for their speed, efficiency, and security. Gen Z, in particular, believes in the security of digital wallets, with 48% of Gen Z users trusting this payment method as compared to only 35% of Baby Boomers.12

Merchants are quickly catching on to the benefits of digital wallets and factoring this trend into their future plans, especially when it comes to online transactions. A survey found that 31% of enterprise respondents expect digital wallets to have the biggest impact on how they engage with customers and process online payments.13 And they may be onto something. By 2024, digital wallets are projected to account for more than half of all e-commerce payments worldwide.14

With a user share of 83%, PayPal, a popular digital wallet solution, is the most-used online payment service in the U.S.9 21% of PayPal users are between the ages of 18 and 29,15 so implementing this digital wallet into your payment process may help you gain visibility with this growing generation of young customers.

Frictionless experiences

Whether shopping online, in-app, or in-store, Gen Z customers are likely to prefer frictionless experiences. Gen Z has become accustomed to efficient processes made even easier by technology. After all, they grew up with the internet.

That could by why one Gen Z payment survey found that 50% of Gen Zers in the U.S. consider experience important, compared to 33% of Baby Boomers.16 Another survey found that over 60% of Gen Z customers had less patience for poorly functioning websites when buying online, leading many to abandon their purchase or leave a negative review.17 Providing the frictionless, streamlined experiences they desire could help you acquire more Gen Z customers.

PayPal offers speed and efficiency through digital wallets, traditional credit, debit, and ACH, as well as contactless QR codes, buy now, pay later, and Venmo. With multiple preferred payment options, a mobile-friendly flow, optimized processing, and so much more, Gen Z customers may be attracted to the PayPal checkout experience.

Social shopping

Social media is no longer just a place to share photos — users can now shop through these platforms, too. Some social media platforms enable users to purchase goods directly through the app. Customers can also navigate to the brand’s website to buy the item after seeing it on social media.

Social shopping is especially prevalent among Gen Z, with 63% of these customers reported to have bought something after seeing it on social media.18 Another survey found that by 2025, 29% of social media shopping will be done by Gen Z shoppers.19

If you’re not thinking about how to leverage social shopping, you could be missing out on your share of the pie. In 2021, the U.S. saw approximately 96.9 million social buyers, and its popularity is only expected to grow.20 Social commerce sales in the U.S. were estimated at nearly $51.8 billion in 2022 and are predicted to reach $145.2 billion by 2029.21

Learn more about Gen Z payment trends

Gen Z is a growing demographic of customers that can present businesses with new opportunities to capture customers, increase sales, and earn a whole new crop of loyal fans. To keep learning about Gen Z payment preferences and the future of shopping, check out this article and webinar from the Retail Touchpoints “Connected Consumer Series.”

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