Has the Pandemic Changed the Ways Generations Pay? We Study the Worldpay Report to Discover the Truth
Worldpay, a world-known payment processing company and a strategic partner of Armada Labs, released research on how the pandemic influences peoples’ payment preferences across the globe.
Generations from all over the world pay differently. Their choice of payment options drastically changes compared to what we had in the same countries, say, a few decades ago. On the other hand, the pandemic seemingly precipitated some tendencies and negatively impacted others.
Considering the pace at which fintech replaces traditional finance, we need to understand how to better serve consumers and tap right into their payment habits and product demands.
How are Payments Treated Among Generations and Countries? (Tip: They are Different)
Let’s study the research and take meaningful insights from it. For the survey, the following consumer groups were selected:
- Gen Z (18–23 years)
- Millennials (24–39 years)
- Gen X (40–54 years)
- Baby boomers (55–73 years)
- Beyond boomers (74+ years)
In most cases, the respondents were asked to describe their paying behavior before the pandemic. Worldpay breaks down research results by country so that we could compare the statistics at a glance. We will dwell on the countries that vividly represent the difference, including Australia, the United States, Canada, the U.K., Germany, and Japan.
Australia
Per the research, the following payment categories were reviewed in each of the examined countries: “Grocery shopping,” “Eating out,” “Travel,” “In-store shopping,” and “Online shopping.”
For instance, in Australia, Gen Z and Millennials are practically two sides of the same coin, as both cohorts tend to use debit or prepaid cards in most cases.
Both are active, mobile groups who readily adapted to the pandemic-conditioned “new normal” yet having concerns about mobile wallets and contactless payments (though those must be more reliable in terms of health safety). Online merchants do a lot to “stir the pot” by facilitating checkout and providing digital loyalty programs for debit cardholders, and the latter is particularly preferred among millennials.
If we look further at other statistics for Australia, we will see more or less the same picture. All prefer credit cards, and we must admit that this method proved itself reliable over the years.
Although all these groups have little interest in modern payment methods, such as voice search, in-car payments, and others, the pandemic emphasized the importance of debit cards that support contactless payments. For instance, only 24% of the prudent Gen X representatives don’t have these cards. Surprisingly, a significant number of respondents (46%) say the pandemic didn’t change their paying habits in any way.
The United States and Canada
Looking at the figures for the U.S. population, we can say with confidence that all generations are more or less “tech-savvy,” striving to keep up with the latest payment technologies. All of them prefer using credit cards most of the time. Only Gen Z makes a noticeable difference from the trend as those tend to rely on cash, besides credit cards.
It seems like the pandemic didn’t scare American youngsters much. Other generations are more prudent in this regard; you will hardly see them paying with cash, perhaps, only Baby Boomers sometimes when eating out or booking travels.
On the other hand, 47% of all the surveyed Americans say that the pandemic didn’t affect their paying preferences, not only Gen X as we might expect, which proves that unsafe cash payments remain the preference of “reckless” young people.
Despite the differences, all generations have at least one thing in common: they all like loyalty programs. Now when they have to save more money for a rainy day because of the pandemic and consecutive economic crisis, loyalty programs with discounts are more attractive to them than ever.
Moving to the north-east, to Canada, we see that the situation is different from Australia, but much resembles the United States. Traditionally, we start with Gen Z.
We aren’t saying that American and Canadian youngsters are ahead of the curve in terms of the latest payment methods’ adoption, compared to Australia. Still, the report’s figures eloquently hint at this fact (probably, because both countries are among the booming world’s fintech clusters). They readily choose options like hand-embedded microchips, voice command payments, have an interest in in-car payments, and already buy things on social networks. In this context, cash may seem a rude word to them.
The United Kingdom
Let’s look at another continent where trends seem to be different from what we have learned already, beginning with the United Kingdom. For instance, for Gen-Z and Millennials, we would say that the choice of payment options here is almost equal in terms of preferences, yet you will be the judge.
Younger Englishmen seem to be the most cautious among all the reviewed generations. They tend to use contactless payments practically with the same frequency as credit and debit cards.
Besides taking care of their health in this way, Gen Z prefers saving a part of their income every month. Millennials are much like them in this regard; they doubt mobile payments’ safety, yet they are comfortable with contactless payments of other types. Both generations don’t like buying things on social networks, saying about the questionable reputation of retailers presented there.
In terms of payments, older generations have much in common with their western neighbors. They prefer debit and credit cards in their daily shopping, sometimes Gen X chooses cashless payments, while Beyond Boomers pair credit cards with cash.
In the U.K., generations approach technologies differently. Whereas Gen Z seems to be more flexible in trying out the latest technologies such as biometric authentication (67% of Gen Z respondents already use it), Millennials are less confident in those (24% of the respondents said they would try in-hand microchips). A quarter of Gen X tries voice payments, and even some of Beyond Boomers consider trying in-hand microchips (8%).
A quarter of all surveyed admit that they had to change their paying habits because of the pandemic, and even if they go to physical stores, they choose the ones that accept contactless payments.
Germany
The same as the U.K.’s youngsters, German Gen Z prefers to control their spending. They tend to save a part of their monthly income, surprisingly even more sums than any other age group. However, they often use cash, besides mobile wallets, and are comfortable buying on social media as long as retailers are trustworthy.
Millennials seem to be more conservative. Although most of them (70%) tried purchasing things on social media at least once, they treat online with suspicion and prefer cash above all other payment means. Nearly half of them are ready to try new payment options, but hardly one can tell when they will try these. The same is true for other age groups.
53% of all surveyed Germans say the pandemic didn’t change the ways they used to pay. Perhaps, the rest are mostly Beyond Boomers who admit that they grew more concerned about using cash after the pandemic happened, yet reserving credit cards for occasional online purchases.
Finally, we will study another region that significantly differs from other countries in many aspects, payments as well, and that’s why it’s intriguing for our research. At this time, we will talk about Japan,
Japan
Japan is a place where traditions reign in almost every aspect of peoples’ everyday life, and payments are not the exception. Japanese treat novelties, such as contactless payments or payment microchips, with suspicion; instead, they prefer paying with credit cards or cash.
For example, Gen Z uses cash most of the time. Even the pandemic didn’t force them to change their mind that much; they continue using cash and prefer shopping in brick-and-mortar stores rather than purchasing things online.
It’s interesting how young people from entirely different nations approach payments in this way, but, again, Japan is a country of habit and tradition. Perhaps, this is the best explanation of the phenomenon we can come up with. Or, maybe they don’t want to spend time figuring out how the new payment option works.
The same is partially true for Millennials, Gen X, and even Baby Boomers. Yet, they use credit cards as the primary method of making payments. Speaking of online payments, merchants should be creative with their discount offers and loyalty programs to convince them to buy something on the internet.
Lastly, Beyond Boomers are reticent Japanese elders less interested in new payment technologies. They can hardly be tempted by online merchants’ offers and prefer using credit cards when making payments. However, a small portion of those surveyed use mobile wallets and even try voice commands as the means of payment.
Did the pandemic change the spending habits of the Japanese? It seems less likely for most of them, though only 26% of the surveyed deny the influence.
Key Takeaways
Now, what can we conclude from the research? Let’s see.
First, “Western” countries, such as the U.S., Canada, and Australia, generally have more “mobile” populations than “conservative” U.K., Germany, and Japan, readily changing their payment habits to contactless credit cards and making more online purchases.
Second, in all the reviewed countries, most of the population uses cash and credit cards supporting contactless payments as the primary payment means. At the same time, Gen Z and Millennials in most surveyed countries, except Japan, also use prepaid and debit cards as alternative payment options (in Japan, those are not an option altogether). Might this mean that Japan is less developed in terms of fintech? Definitely, yes.
Finally, when it comes to the question, “Did the pandemic change day-to-day payments?” opinions split. In some nations, people treat it more seriously than others, admitting that they began using contactless payments more often as a safety precaution.
Japan became one of the first countries after China, where the outbreak had happened. Perhaps, for this reason, the Japanese treat the pandemic more leniently, saying that coronavirus didn’t affect their payment preferences. We wonder, if they were asked the same question, say, in February of this year, what would they say then?
We see that the world of payments changes, not only because of the pandemic; instead, the pandemic is a temporary phenomenon whose effects will pass after a while. Yet, the inner processes of human nature, the attitudes deeply ingrained into each generation’s lives and influenced by sociocultural factors deserve dedicated, more profound research.
