In a world where technology evolves at breakneck speed and consumer preferences constantly shift, businesses find themselves on a perpetual quest to meet the ever-changing demands of their target audience.

And in the landscape of e-commerce, two groups are increasingly taking centre stage: Millennials and Generation Z. By 2029, these tech-savvy generations will constitute 72 percent of the global workforce, a dramatic leap from the 52 percent recorded in 2019.

As these younger generations gain financial independence, their economic influence continues to grow, reshaping the future of payments. To stay ahead of the game, businesses must adapt and cater to their unique expectations.

Offering a variety of payment options is crucial because, believe it or not, 51 percent of Millennials and 48 percent of Gen Z will abandon a purchase if their preferred payment method isn't available. The combined influence of these two generations is driving a seismic shift in business and payment practices.

The Future at Your Fingertips: The Rise of Frictionless, Digital Payments 

The payment behaviours and expectations of Millennials and Gen Z differ significantly from older generations. They love mobile commerce, with 79 percent of Millennials and 72 percent of Gen Z preferring to shop online via smartphones, as compared to only 54 percent of Generation X and a mere 27 percent of Baby Boomers.

This trend is powered by the widespread availability of smartphones, affordable high speed data, rapid tech advancements, and evolving consumer expectations for seamless, on-the-go purchases. 

Millennials and Gen Z want the freedom to make payments whenever and wherever they please, using any device. They want "invisible" payments that seamlessly integrate into their daily routines. These generations are increasingly drawn to subscription-based models, streamlined payment processes, and are shedding the use of physical cash. Gen Z is leading the charge, investing nearly twice as much in subscriptions compared to other generations.

What sets Millennials and Gen Z apart is their innate comfort with technology and preference for mobile payment methods. They are digital natives who routinely transact online, use mobile banking apps, and are very comfortable with 3D Secure and SCA (Strong Customer Authentication) steps.

Gen Z represents the highest share of consumers who exclusively use digital banking, with 60 percent indicating that they would switch financial institutions for a better mobile or digital experience. 84 percent of Millennials and 78 percent of Gen Z have connected money-related apps to their financial accounts. They trust payment technology, have a keen eye for spotting fraud, and welcome innovations that facilitate frictionless payments.

Top 3 Traits Today's Shoppers Desire in Payment Experiences

Social Media Powered Shopping

The surge in social and live commerce has been nothing short of phenomenal. Users can now discover products and make purchases in real time while engaging with influencers and brands on social media platforms. In 2022 alone, social commerce brought in a staggering $728 billion USD worldwide.

Businesses can tap into this potential by embedding pay-by-link capabilities into social media apps. The option to pay by card or open banking transfer in multiple currencies, enabling automatic recurring payments for memberships and events, etc. are all ways in which businesses can unlock a world of convenience for this customer cohort, leading to increased satisfaction and brand loyalty.

Frictionless Payments

Millennials and Gen Z are hybrid shoppers who easily move between physical stores, online platforms, and virtual experiences, and expect easy payment options across all these channels. 

To facilitate omni-channel retail experiences, merchants can adopt a payment solution that effortlessly integrates with their current ERP/POS and payment gateways. This is particularly vital for those businesses that easily transact online due to the bespoke nature of their products or services.

Such businesses need a solution that converts risky, time-consuming remote transactions into secure, convenient online payments. Merchants can offer personal consultations online or over the phone, and follow up with secure, branded payment requests sent through SMS, email, WhatsApp, or web chat. 

Greater Control

Millennials and Gen Z value control over their payment methods and access to their financial information. It's crucial to provide a user-friendly, mobile-responsive payment solution that empowers customers to take charge of their shopping experience.

Enabling customers to authorise and authenticate payments with a simple tap within their mobile banking app, all without having to divulge sensitive card or bank details, creates a seamless and secure native payment experience that fosters trust and a sense of control.

Making payments with a simple click or tap, without needing physical cards or cash, is perfect for Millennials and Gen Z's digital-first mindset. Pay by Link solutions can be easily integrated with popular messaging and social media apps, aligning perfectly with the communication channels they use every day.

The versatility and speed of Pay by Link services match their fast-paced, on-the-go lifestyles, making this payment solution a natural fit for their preferences and habits.

About the author

Serial paytech entrepreneur Donal McGuinness is CEO of Prommt. His experience in mobile payments dates to 1999 when he founded his first mobile payments company, ItsMobile. 

Donal has a passion for payment innovation and believes the next 2-3 years will see a rapid acceleration of innovation in payments. Donal’s experience over the last 25 years crosses over mobile payments, B2C and B2B payments, Money Remittance, ID verification and loyalty platforms.