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Know Your Customers: How Different Generations Prefer To Pay

Kristen Gramigna
Dec 01, 2016

From Baby Boomers to Gen Z, different demographics prefer different payment methods.

Know Your Customers: How Different Demographics Prefer To Pay

Which types of payment your business should accept isn’t about jumping on the hottest tech trends, or sticking to the system that’s easiest for you as a business owner. Selecting the right payment tools for your business requires that you know how your customers want to pay, so you’re equipped with all the tools you need to meet their expectations and remain competitive with the market. Here’s a look at how different demographics prefer to pay.

Generation Z

Gen Z-ers (who were born between 1996 and 2010) are in their late teens and early 20s now, but they’ll represent 40 percent of all consumers by 2020, according to FastCoExist. The publication reports that when a market research firm did an extensive study of the preferences and habits of these young consumers, they found that they’re highly comfortable using technology for financial transactions — including the use of mobile payment apps, and those that allow them to transfer funds instantly on their mobile device. This demographic also makes up the largest user group of mobile payments users, followed closely by millennials, according to The Pew Charitable Trust findings.

Unlike millennials, however, who are often stereotyped as shunning materialism and prioritizing experiences over things, Gen Z-ers see ownership of “stuff” as an accomplishment that signifies status. Despite that, a recent study by asset management firm Piper Jaffray revealed that they’re budget-conscious consumers. While they influence $75 billion in discretionary spending, they’re more likely than older consumer segments to use payment technology that allows them to share or split purchases with friends.  

While Gen Z prefers to shop online, this group gives priority to retailers that offer brick-and mortar-stores as well as an e-commerce option, compared to brands with an online presence only. Gen Z-ers in the Piper Jaffray study also ranked Apple Watches as a top brand preference, indicating that they are comfortable with wearables and their role in facilitating mobile payment.


Born between 1982 and 2004, millennials are more likely than older consumers segments — like Generation X and Baby Boomers — to use technology and mobile devices to pay; they’ve come of age surrounded by rapid advancements in technology. The Pew Charitable Trust data reveals that about 90 percent of millennials own smartphones, and 50 percent have used their mobile device to make a purchase. Millennials are also more likely than Gen X or Baby Boomers to use mobile wallets, and branded mobile payment apps (like those offered by Starbucks and Dunkin Donuts) that reward them for loyalty.

Additionally, PaymentEye reports that millennials are the most frequent users of PayPal: 32 percent of those surveyed use the payment service, compared to just 15 percent of Gen Xers and Baby Boomers who said the same. Of those millennials who use PayPal, 40 percent access the service on their mobile device.

Despite their adoption of payment technology, most millennials’ payment transactions don’t involve the use of credit. A recent Bankrate survey indicated that 33 percent of the youngest millennials (who aren’t yet 30 years old) have a credit card; credit card ownership increases to 55 percent among older millennials. Bankrate’s experts explain that millennials tend to be wary of credit because of their firsthand experiences with the financial aftermath created by the Great Recession. As a result, their mobile or digital purchases are likely to be linked directly to a bank account or debit card, rather than a credit card.

Generation X

Slightly more than 80 percent of Generation X consumers — who were born between 1965 and 1983 — own smartphones. Though they’re slightly less inclined to use mobile payments to make a purchase compared to millennials, nearly half of those surveyed did. Like millennials, Gen Xers who do use mobile payments like the opportunity to earn rewards, and appreciate the convenience of being able to pay quickly and receive an electronic receipt.

Gen Xers are heavy users of credit cards, and are far more likely to have credit card debt compared to both millennials and baby boomers; only 42 percent of Gen Xers pay their credit card balances in full each month, according to a study by Lending Tree.    

Baby Boomers

Baby boomers — who are about 75 million strong and currently between the ages of 51 and 69 — have seen significant changes to technology, consumerism and payment options in their lifetimes. Like Gen X, they use credit cards, but are more likely to pay their monthly balances. Though just 33 percent of baby boomers surveyed by The Pew Charitable Trust said they had used mobile payments, 43 percent said the reason isn’t so much a lack of trust in technology; they simply prefer to use cash.

Only 13 percent of baby boomers who are older than 60 still write checks, according to Federal Reserve data. (In fact, the site’s experts predict that paper checks will be extinct by 2021).  Instead, the site reports that about 80 percent of consumers between ages 55 and 65 use debit cards to make payments. 

Understanding which payment method your target audience wants to use is key to communicating that you understand who they are, what they want — and value their business enough to tailor your payment processes to their preferences.

Whether your goal is to attract mobile-dependent Gen Z-ers, or debit card-toting baby boomers, there’s a payment tool that’s right for your business, and its most important customers.


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Kristen Gramigna
Kristen Gramigna is Chief Marketing Officer for BluePay, a provider of ecommerce payment processing. She brings more than 20 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.