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Know Your Customers: How Different Generations Prefer to Pay
From baby boomers to Gen Z, different generations tend to prefer different payment methods.
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Payment method preferences — including credit and debit cards, mobile payments and buy-now-pay-later (BNPL) options — often vary among generations. If you want to maximize your sales, it’s essential to understand how your audience prefers to pay.
How each generation prefers to pay
Use the right payment tool for your clients, from mobile-dependent Gen Zers to tech-cautious Baby Boomers.
Generation Z: Debit cards and mobile wallets
An estimated 52 percent of Gen Zers (born between 1997 and 2012) prefer debit cards for purchases, according to research from SurveyMonkey. Gen Zers are also more likely to use online payment apps than other generations, so businesses serving them should prioritize card readers with near-field communication (NFC) capabilities for accepting digital wallets.
Gen Zers, known for being more budget-conscious, are less likely to sign up for loyalty programs; many Gen Z shoppers believe these programs encourage them to spend more than they otherwise would.
A recent study also found that Gen Zers primarily use BNPL for smaller purchases — like clothing, groceries and restaurant purchases — as opposed to big-ticket items.
Millennials: Credit cards and mobile wallets
Millennials (born between 1981 and 1996) are more likely than older consumers to use technology and mobile devices to pay. However, they are also the generation that’s most likely to pay via credit card. An estimated 65 percent of millennials have at least one credit card, according to Kantar.
Millennials are more likely than Gen X or Baby Boomers to use mobile wallets that include credit, debit and prepaid cards. About 70 percent of millennials have a PayPal account, according to GoBankingRates, and they frequently split bills or pay using a peer-to-peer payment app like Cash App or Venmo.
This generation also frequently signs up for branded mobile payment apps, such as Starbucks and Dunkin’, which provide regular discounts.
Generation X: Credit cards
An estimated 36 percent of Gen Xers (born between 1965 and 1980) use mobile wallets, and 22 percent of mobile wallet users link their loyalty credit cards to these wallets to accumulate reward points, FIS Global reported.
About 30 percent of Gen Xers prefer to pay by credit card when dining out, 27 percent when buying groceries and 29 percent when shopping in person. They remain cautious of digital payments compared to their younger counterparts.
However, BNPL options are becoming more popular among Gen Xers, especially for purchasing clothing and furniture, according to PayPal. More than 50 percent of Gen X customers were repeat users of the “Pay in 4” feature.
Baby Boomers: Credit cards
Baby boomers (born between 1946 and 1964) prefer to use credit cards and are the generation most likely to pay their monthly balances in full. They are open to adapting to digital payments if doing so provides convenience and value.
Baby boomers have also started using BNPL options for big-ticket items like furniture and appliances. Estimates from eMarketer suggest that Gen Xers and boomers will make up approximately one-third of BNPL users in the near future.
Best POS systems for accepting payments
The best point-of-sale (POS) systems are easy to use and intuitive, allowing seamless integration across different payment methods. In addition, mobile POS systems combine offline and online sales.
These are some of the top POS systems:
- Clover: Clover supports multiple payment options including credit and debit card payments; Europay, Mastercard and Visa (EMV) chip cards; contactless payments; and online payments. Learn more in our review of Clover.
- Lightspeed: Lightspeed allows businesses to accept in-person credit card swipes, manually keyed-in card payments and online transactions. Lightspeed also has customer relationship management tools so companies can create tiered customer rewards programs. Read our Lightspeed review to learn more.
- Toast: Toast’s POS system supports online ordering and provides a contactless dining experience. It also offers robust customer loyalty programs via the Toast app, where guests can earn points every time they pay by card. Restaurants can customize how customers earn and redeem their accrued points. For more information, check out our Toast review.
- TouchBistro: TouchBistro provides options for customer loyalty programs, as well as table-side ordering and payment processing, online ordering and the ability to purchase gift cards. Learn more in our TouchBistro review.
- Cake: Cake’s POS system is easy to use, with an intuitive interface. It provides customer support, including an implementation team to help you with the system during your first six months. For more information, read our review of Cake.
Julie Thompson and Kristen Gramigna contributed to this article.
