Generation Z consumers are joining the workforce in significant numbers with the potential for more purchasing power, making them the future of fintech within e-commerce. To bolster this newfound status, Gen Z consumers are most receptive to trying new payment technologies, helping to drive the digital payment industry forward.
In order to cash in on the developing fintech revolution, merchants need to provide the best options to reach these consumers in 2024 and beyond so they do not get left behind by a generation of younger consumers who take their business elsewhere.
Network Merchants Inc., or NMI, is a payment gateway service provider for merchants in various business types and verticals.
According to NMI Chief Growth Officer Peter Galvin, merchants must make sure they have established support for various payment options, including new payment technologies like digital wallets and Buy Now, Pay Later (BNPL) plans, that Gen Z consumers crave.
Integrating embedded payments can ensure businesses are able to support new payment methods quickly, Galvin told the E-Commerce Times.
“As Gen Zers increase their spending online and in-store, merchants must make sure they offer a variety of payment methods to accommodate consumers’ different preferred payment methods,” he added.
While this can seem daunting, integrating embedded payments sets merchants up to quickly add new payment technologies, showing consumers they are adaptable and willing to cater to their needs, he explained.
Why Payment Options Matter
Systems like NMI’s modular payment gateway platform give merchants payment integration and processing options they can tailor to their unique customer needs.
Gen Z individuals, born between 1997 and 2012 and currently comprising the 18- to 26-year-old adult consumer group, have fundamental differences in how they buy and bank compared to older consumer constituents.
Recognizing these differences and meeting those needs will continue to significantly affect how e-commerce vendors succeed in keeping Gen Z as loyal customers.
A lesser-recognized segment of young shoppers called Zillennials, born from roughly 1993 to 1998, tag along as a micro-generation buying force pursuing the same Gen Z quirks.
These are not limited to displeasure in having to call someone or wait for an email response to complete simple tasks.
Updating an address, locking or unlocking credit cards, or disputing a transaction all must be a quick, easy, automated process for them.
“Many younger consumers do not carry cash or even physical credit or debit cards. So it is critical for merchants to accept mobile payments since they are rarely without their phones,” offered Galvin.
Overall, payments are a vital function for both brick-and-mortar stores and online storefronts to invest in. He added that payments are often the most tech-centric part of physical stores, not to mention the area where younger consumers are the most critical.
Combining Sector Resources
A derivation of “financial technology,” fintech refers to companies that use modern technology to challenge conventional financial processes in the financial sector. Fintech has become a vital ingredient in the growth of e-commerce.
Secure payment platforms and digital wallets transformed payment processes. They allow e-commerce to thrive worldwide.
Fintech allows e-commerce businesses to provide services such as advance payment and refund options to their customers wherever they reside. The technology brings digital products and services directly to the e-commerce marketplace.
Usage examples include peer-to-peer payments, online e-commerce purchases, donating to funding platforms, and online banking. Fintech applications in e-commerce can include any app, software, or technology that allows people or businesses to digitally access, manage, or gain insights into their finances or make financial transactions.
Flexible Money Methods Needed
With the growing rise of e-commerce and online shopping, younger consumers have not soured on making in-store purchases. Therefore, having a full kit of modern money tools to complete their purchases is strongly at play in both physical and virtual stores.
Galvin suggested that digital wallets and biometric payment methods are critical for creating the best possible payment experience for younger consumers. These electronic options encourage them to make more in-store purchases.
New data from NMI found that 83% of Gen Z consumers are always excited to try new payment methods. It is essential that merchants, independent software vendors (ISVs), and independent sales organizations (ISOs) partner with merchants to enable these payment experiences.
They must work together to ensure they have equipped their payment systems to handle this new era of payments, whether in-store, online, or on a mobile device,” Galvin noted.
“Offering younger consumers preferred payment methods is key to establishing brand loyalty and keeping Gen Zers coming back,” he advised. “With Gen Z consumers increasingly seeking alternatives to credit cards, BNPL will remain a preferred payment option for many consumers throughout 2024.”
No Free Ride for Merchants
Galvin insists that it is important that online merchants offer Buy Now, Pay Later options, as two in three consumers use BNPL services at least half of the time when shopping online.
Providing several payment options — including at least one mobile choice — increases the chances for new sales from younger consumers. But that is not free for merchants, and it is not always quick and easy for businesses to implement multiple methods.
The process of setting up multiple payment options can become expensive and time-consuming. If the business tries to enable these methods on its own, it can discourage completion and leave the retailer on an uneven footing with competitors.
According to Galvin, the best way for merchants to set themselves up to quickly adopt new payment technologies is through embedded payments. By embedding payments into their current software management stacks, merchants will not have to leave their native systems to accept payments.
This approach means merchants can quickly and easily add new payment methods like digital wallets to their platforms, which is important today since younger consumers are leading the online shopping wave, he observed.
“Gen Zers hold in-store payment technology to a higher standard and have no problem taking their business elsewhere if their preferred payment options are not available,” he concluded.
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