If your online store targets Generation Z – today’s young consumers, born between 1995 and 2015 – you need to be catering to a tech-savvy, digital native audience.
This means not only creating an innovative, user-friendly shopping experience, but also creating an innovative, user-friendly payment experience as well.
Gen Z shoppers are hungry for alternate payment methods when buying online. If you only offer the big three credit cards as payment options, you might find yourself at a disadvantage.
Here’s what you need to know about the specific alternate payment methods Gen Z wants and how you can deliver these methods safely and securely.
Popular Alternate Payment Methods
With more than 200 alternate payment methods currently available to merchants and consumers — including bank transfers, direct debits, e-wallets, mobile, cash on delivery, digital currencies, and local cards — it’s hard to know exactly which approach Gen Z prefers.
These Gen Z shoppers are comfortable with technology, and they’re happy to use the newest payment methods if it means an easier shopping experience and less time required to checkout.
It’s also worth understanding that consumers aged 18-35 in general are “credit averse,” with just over half of this population owning a credit card. More tellingly, more than 90% of these consumers don’t even want one.
Instead, these young people are drawn to services they can use on their mobile phones. While older generations still rely on desktops or laptops to shop online, younger consumers are far more eager to embrace mobile commerce, or m-commerce. Nearly half of Gen Z consumers shop more frequently on a mobile device than on a computer, compared with roughly one-third of older consumers.
Here are five mobile-friendly payment alternatives you should consider for your e-commerce store.
1. Biometric Payment Authentication
Gen Z is already comfortable with biometric payment authentication, such as the fingerprint and face recognition that’s now popular on mobile phones and laptops. They’re also extremely comfortable making payments and purchases using voice-activation technology. Today’s young consumers are ready and willing to buy groceries using a voice command with their IoT refrigerator or to buy the latest Taylor Swift album via their car’s Wi-Fi-enabled entertainment system.
2. Contactless Payments
While Gen Z still carries cash, they certainly prefer digital payments. In fact, 53% of Gen Z shoppers prefer shopping with stores that accept contactless payments.
3. Peer-to-Peer Payments
Also rising in popularity are peer-to-peer payments, such as Venmo and PayPal, that let consumers split a dinner bill as easily as they can pay rent or order gifts. Local organizations and small business owners are also increasingly adopting peer-to-peer payment options, particularly with pop-up shops and non-profit events.
Despite the potential volatility of cryptocurrencies, Gen Z shoppers generally have a more positive outlook regarding this payment alternative than do other consumers. Current adoption rates remain low overall, but Gen Z consumers are prepared to use cryptocurrencies in the next two years as they become more widely available and more retailers accept them as an alternative.
5. Mobile Wallets
Not only have mobile devices made it easier to stay in touch, they’ve also made it easier for consumers to make in-store payments. Using an app that stores credit card information, like Apple Pay and Android Pay, customers can easily pay for purchases without having to physically present credit cards.
Half of Gen Z consumers report having used a mobile wallet at least once, compared with just 30% of other consumers, and 25% of these young spenders regularly make payments with their mobile wallet.
The convenience of being able to leave a physical wallet at home is making this approach particularly trendy among travelers, young professionals, and tech savvy early adopters. Business Travel News acknowledges corporate travelers have emerged as early adopters in this space, just as they did previously with mobile travel booking.
How to Evaluate Alternate Payment Methods
Most Gen Z consumers feel more confident in the security of their financial details online than do other consumers. Only 32% of Gen Z shoppers are worried about security, and they’re also less concerned than their older counterparts about fraudsters accessing and using their personal financial information.
These statistics don’t mean e-commerce merchants should let payment security fall by the wayside.
With millennials expected to make up more than a third of the global workforce by 2020, it’s no surprise that both the financial services industries and e-commerce retailers are looking for ways to capture this spending power while eliminating checkout friction.
As more and more of these young consumers turn to their mobile devices to make payments, merchants also need to ensure they’re not increasing fraud risk alongside convenience. Fraudsters are always on the lookout for vulnerabilities in a merchant’s fraud prevention solutions, and today’s retailers simply can’t afford to be a victim.
That’s why today’s merchants must examine which payment methods make sense for their online store and then discuss their options with a trusted partner. The experts at ClearSale have nearly 20 years of experience and can help you evaluate the options that will contribute to your bottom line and increase customer satisfaction without increasing expensive fraud and chargebacks. Contact us today to get started.