Gen Z shopping habits are rapidly evolving. This younger generation of shoppers is playing an instrumental role in driving the buy now pay later (BNPL) trend. TThey demand fast, cutting-edge technology tools and will pay a premium for personalised products, services, and experiences.
Similar to their millennial counterparts, these younger shoppers are drawn to the flexibility and convenience offered by interest-free shopping. This has quickly made buy now pay later as ubiquitous as any other payment option at checkout.
Gen Z shopping habits points to interest-free shopping
While BNPL is being utilised by consumers of all ages, it is most popular amongst Gen Z millennials, who prefer to have a selection of payment options and are quick adopters of new payment technologies. In addition, younger generations look at BNPL as a budgeting tool.
Data from eMarketer confirms this, finding nearly 75% of BNPL users are Generation Z or millennials. At the same time, Gen Zs’ spending through Buy Now, Pay Later has increased by 201% since last year. Similarly, a PYMNTS’ survey found that 15% of millennials and 5.7% of Gen Z consumers used BNPL in-store compared to only 3 percent of older generations.
Avoiding credit cards
Millennials and Gen Z came of age during the 2008 financial crisis. As a result, they have learnt from their parents’ mistakes and are more financially savvy. This has led them to avoid interest-bearing traditional payment solutions in favour of more innovative, interest-free options.
Moreover, the economic uncertainty, job loss, and salary cuts due to the COVID-19 pandemic have further accelerated BNPL’s growth. BNPL solutions put the consumer in the driver seat, empowering them to pay and spend the way they want minus the interest and fees.
A digitally native generation
Younger shoppers have grown up in an ‘always on’ reality. As the most digitally savvy generations, Gen Z and millennials are quick to adopt new forms of technology, including digital payment services
They are digitally minded and with the growing popularity of eCommerce, they want a checkout experience that is flexible, fast, and seamless. BNPL checks off all these boxes. They expect to be able to access whatever they want, whenever they want. Having 24/7 access to information has made them more educated, knowledgeable, and empowered when it comes to which brands, products. and services to choose. Rather than just paying with a credit card, these consumers are looking for an experience.
By the end of 2022, 44.1% of Gen Z digital buyers ages 14 and older will have used BNPL services at least once that year, compared with only 37.2% of millennial digital buyers. While a report by Afterpay predicts that millennial and Gen Z’s share of spending will surge to 47% 2030.
Buy now pay later the new status quo
Buy now pay later is expected to grow exponentially in the coming years. Especially as Gen Z shopping habits move increasingly online. As the eCommerce landscape becomes more and more competitive, and Gen Z shopping habits continue to evolve, BNPL will remain a crucial offering for merchants. Therefore, brands looking to remain competitive and relevant among younger consumers need to incorporate BNPL and interest-free payment solutions at checkout.