Generation Z and payments: What to know|
Generation Z is the demographic of teenagers and young adults aged 13 to 22 that follow just behind Generation Y, otherwise known as millennials, who are between 23 and 37. According to a study conducted by Forrester Research and backed by American Express, 81 percent of the youth in Generation Z are already making purchases on their own and 72 percent are utilizing checking and savings accounts to do so.
Forbes wrote that this generation has $44 billion in buying power. Generation Z is the first of its kind to grow up fully immersed in the internet and studies are showing they have a greater propensity to rely on digital technologies to make or guide their purchases.
Generation Z can greatly affect the retail market
"Data security can play a significant role in establishing or ruining the consumer-to-merchant bond."
The American Express study surveyed 1,027 North American members of Generations Y and Z. It concluded that there exist many glaring differences between the two age groups in terms of how they make purchases. A joint study of over 15,000 Generation Z'ers by the IBM Institute of Business Value and the National Retail Federation discovered that they spent almost $830 billion in 2015. From a retail perspective, it was found that 98 percent of them make their purchases in brick and mortar locations, with 67 percent saying they preferred that method over shopping online.
Card branded checkout solutions, like Amex Express Checkout, were used by 43 percent of Generation Z'ers in the previous three month period compared to only 29 Generation Y'ers. Over the same length of time, 33 percent of Generation Z members said they used a mobile wallet versus only 22 percent of millennials.
The IBM and NRF report also noted that 61 percent of Generation Z respondents said they valued the information security provided by retailers they made purchases from.
Almost 60 percent of Generation Z members said they had high expectations of a brand's efforts to gain their trust. Data security can play a significant role in establishing or ruining the consumer-to-merchant bond for this demographic, even more so than for millennials.
"Our research shows that Gen Z is two steps ahead (of Millennials) when it comes to interest in payments solutions and technology and their expectations of brands," said Luke Gebb, senior vice president of Enterprise Digital at American Express, in a company press release.
Retailers have a responsibility to protect the data of not only this young demographic, but of all consumers. As Generation Z ages and their buying power increases, retailers will have to work diligently to appease their shopping and purchasing habits. Efficient and secure payment processors can allow them to keep up with the tech savvy consumers.
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