How Millennials and Gen Z are shaping the future of payments

Monday, January 31, 2022 4 minute read

4 minute read

Millennials are the largest living generation today. Together with Gen Z, they will make up 72% of the world's workforce by 2029. The combined purchasing power and influence of these two generations will shape the world of commerce in the years to come.

“Millennials are stepping into a period of time in which they're going to be the ones who make up a large part of the workforce, who accumulate the most wealth, and who occupy positions of influence and power," says Adam Mitchell, SVP of business operations at Global Payments US-based business, Heartland Payment Systems.

To attract and retain these generations, it is critical that you understand their purchasing behaviors and adopt preferred Gen Z and millennial payment methods to ensure a seamless, optimized experience—whether you're a business selling goods or services, or an issuer of cards and other digital payment solutions.

Meeting Gen Z and millennial payment preferences

Accommodating boomers and Gen X remains important, of course, but capturing the loyalty of millennial and Gen Z consumers will be even more essential to businesses' long-term success. Combined, these two generations already wield around $350 billion of spending power in the US alone. And Gen Z's economic power is the fastest growing of any generational cohort, with their income expected to increase fivefold by 2030 to $33 trillion as they enter the workplace—accounting for over a quarter of the global income.

Capturing younger consumers' loyalty, however, will increasingly require businesses to accommodate the many ways this cohort wants to pay.

“Having a good payment experience is not only valuable to younger consumers—it's an expectation," says Mitchell. “They haven't grown up having to deal with processes like writing out a check for groceries. They want ways of paying that reduce friction and deliver a modern and efficient experience, which is almost always digital."

Going contactless—especially with digital wallets

Embracing contactless payments—which allow consumers to pay at checkout by tapping their contactless card at a point of sale or by holding their phone or wearable device near the payment terminal—is one way younger generations prefer to pay.

contact less at store

Over half of global millennials are likely to avoid shopping at stores that don't offer contactless payments.

Digital wallets are an especially popular—and growing—contactless payment method among younger consumers. Sixty-five percent of young millennials used a digital wallet in 2021, compared to 59% in 2020. And 57% of Gen Z used digital wallets, up from 50% in 2020.

It's also increasingly common for consumers of all ages to utilize multiple digital wallets for varying reasons. One may use Apple Pay for storing plane tickets and making payments to brick-and-mortar businesses; Venmo or CashApp for peer-to-peer payments; PayPal for online or mobile payments; and more.

Open to cryptocurrency opportunities

Digital wallets' capabilities are also expanding to support younger generations' interest in alternative digital currencies, including cryptocurrency, like Bitcoin. For example, millennials are especially interested in crypto—as more than 67% reported that they are more open to using cryptocurrency in 2021 than they were in 2020.

Embracing buy now, pay later

An alternative payment method that is proving especially appealing to Gen Z consumers is buy now, pay later (BNPL)—which allows them to choose an option to pay over time rather than pay the full price upfront. Consumers can opt-in to BNPL in three ways–during the shopping process, at checkout, or post-purchase through installment payments on their credit card.

Almost 75% of BNPL users in the US are Gen Z or millennials, and 75% of the UK's BNPL users are 18 to 36 years old.


BNPL is likely here to stay—as it poses an innate appeal for young consumers navigating their financial circumstances.

“With [Gen Z consumers] being in the early portions of their careers and maybe not having a lot of disposable income, the ability to purchase something and pay for it over time without accumulating a significant amount of interest is really attractive," says Mitchell of BNPL. “Plus, it's simple to use. The technology is integrated right at checkout, and it's easy to make the things that you want fit within your budget."

Going live and video-enabled

The next era of ecommerce shifts payments right into live video sales. For retailers in particular, this is an evolving trend to keep an eye on.

Livestream selling—also known as live commerce—allows businesses and individuals to sell items directly and instantly to customers via video, with audience participation enabled via messenger and chat tools, reaction buttons, and ordering functionality. Perhaps a natural progression to more traditional TV shopping channels, livestream selling is popular on social apps and often relies on celebrities and other influencers to attract large audiences.

Live commerce is taking off in China, where in a 2020 survey, 67% of consumers in China said they had bought products via livestream in the past year—and is proving popular with those millennial and Gen Z consumers who appreciate an innovative and interactive shopping experience. Some companies that implement live commerce are seeing their share of younger audiences increase by up to 20%.

Looking ahead to new payment methods

When it comes to payments, businesses who aren't already accepting contactless payments or exploring options like BNPL risk falling behind in younger consumers' preferences—or worse, risk losing them altogether due to delivering a poor payment experience. Fortunately, there are new payment technologies emerging to help businesses keep up with consumers' preferences.

For example, tap-to-phone payments (also known as mobile tap or tap-on-phone technology) are currently gaining steam in the Asia Pacific region, enabling businesses to use smartphones or tablets as point-of-sale terminals. They can accept debit, credit, or digital wallet payments with no hardware required. This potentially creates a new opportunity to take in-person payments on the fly in a secure manner.

“Gen Z consumers grew up with digital-first commerce," says Mitchell. “They probably don't remember a world prior to Venmo, CashApp, or PayPal. If you put yourself in that kind of headspace, you can recognize that you have a generation with a completely different perspective on payments—and it's up to businesses and issuers to match that perspective with what they offer."

Continued advancements in payments technology will serve to make commerce even more contactless and digitally-supported in the future—a trend younger consumers have come to expect. By offering the preferred Gen Z and millennial payment methods, you can position your business for sustained success.

Are you delivering the right mix of payment methods? Contact us today to learn how we can help you tap into the combined purchasing power and influence of these younger generations. 

Recommended for you