Payment solutions for Millennials and Generation Z
It is no secret that Gen Z and Millennials are shaping the way we pay online in Canada. From Interac e-Transfer®, Buy Now Pay Later options (installment plans), and digital wallets, all the way to using cryptocurrency, payment options have never been so broad and dynamic.
So why is this customer segment so important and how do they influence eCommerce?
Large and growing base- The influence these generations have on the payment ecosystem is tremendous as they make up 40% of the entire Canadian population. More than half of young adults are planning to partake in more online shopping and less in-person shopping after the pandemic.
High purchasing power- In 2021, 53% of millennials' purchases were made online. In addition, Millennials now hold the highest purchasing power while the baby boomers are reaching retirement with an average disposable income of $82000.
Ecommerce and online businesses can take a cue from what this generation of shoppers are looking for and incorporate them into their preferred payment methods to ensure higher conversions. In fact, 55% of shoppers abandon ship- no wait, abandon their cart due to payment-related issues faced at checkout.
What are Gen Z’s and Millennials looking for from brands?
Cards are out. E-transfer is in
Credit card usage is dropping year over year. This payment method saw a decline of 11% during the peak pandemic. It’s not surprising as more shoppers are looking at alternative payment methods. 56% of shoppers between the ages of 18-34 would prefer to pay directly from their bank if that option was available instead of credit.
Speed and logic
The probability of a bounce increases by 32% as the load time for your page increases from 1-3 seconds. With the digital age of smartphones, everything is in the palm of your hand and that is especially true for Gen Z and Millennials. This means they hardly wait for anything, so if your website is not optimized and loads slowly, you can expect a high number of bounces.
The same goes for the overall structure of your website. Making sure your website is easy to navigate will help your customers stay on your page for longer. This also is important during checkout, make sure it is no more than a 5 step checkout with no forced sign-up. You can also add a checkout timer or a low-stock tag on items to build a sense of urgency and impulse buys.
The new normal - Change
With a seemingly new trend every week on TikTok, Instagram, Youtube and Snapchat, you have to be on your toes. Generation Z and millennials are more connected on these platforms than any other generation so you can bet that they are far more likely to jump on trends as they come up. When it comes to shopping it is the same, with the overwhelming influence of social media and the shift to social selling by influencers, social commerce is gaining momentum, rapidly. The way you take advantage of new trends can be as simple as changing featured items on your site, updating payment methods, changing the structure of your site, different content strategies, and anything else that keeps you ahead of the game.
Security is key
68% of consumers feel that their risk of cybersecurity breaches is increasing (see source). Although this is not generation-specific and all generations feel that their security is at risk, Millennials and Gen Z are most connected online and so have a greater risk of an account being hacked. Offering payment methods that are the most secure and offer bank-level security is what would help Gen Z in conversions. And what better way to offer bank-level security than letting them pay seamlessly through their bank accounts?
Convenience, Convenience and Convenience
Gen Z is all about finding new ways to make their lives more convenient. A perfect example is the rise of smart homes. The smart home market is expected to have an annual growth rate of 21%. Buy Online, Pick-up In-store (BOPIS) is also on the rise as they want the comfort of shopping from home but want the goods faster. Remember, they want speed (as we mentioned earlier) both online and offline. Convenient payment methods i.e., not having to create accounts, maintain balances, top-ups or worry about credit scores are factors that play a role when it comes to choosing payment methods. This is why mobile wallets' growth rate is slowing down as other new payment methods emerge.
Prefer local
Made in Canada matters to the socially and environmentally aware Gen Zs and Millennials as they want to give back to their local communities. The same is reflected in their payment choices. Interac, an undisputable Canadian brand, is the leading peer-to-peer payment method accounting for 70% of the transactions. This generation is increasingly looking at using this local home-grown brand when shopping online which is why Shopify (another loved Canadian company) has added this payment method to its suite of alternate payments on its platform. It is no wonder that big brands like OVO, Kollar Clothing, Permanent Vacation, etc have added Interac e-Transfer with DirectPay to their checkout page.
The influence of Gen Z and Millennials on your e-commerce, remittance and retail strategy is indisputable. Learn how different payment methods such as installment plans, wallets, credit cards, crypto, and e-transfer stack up against each other and which or rather a combination of payment methods would be best suited for your brand and customers.
If you are interested in understanding how various payment methods stack up against each other then click here.