What Gen Z wants from payment providers and digital banking

Generation Z—people now aged 12 to 27—comprise about 20% of the U.S. population, and their preferences and expectations around shopping, paying and transacting are influencing the payments landscape. They are a driving force behind new technologies and tools that consumers of all ages will find convenient and eventually adopt.

It’s important for issuers to pay attention to what this generation expects and wants—as their preferences and needs will define what will become table stakes for businesses’ digital offerings in the future. 

So, what is Gen Z looking for from their purchase experience? Here are three key things:

1. Digital tools to self-serve

As digital natives, Gen Zers are highly comfortable using technology and have been early adopters of digital banking experiences and tools. Research from Ernst & Young, for example, shows that they are up to three times more likely to use modern payment options, including mobile wallets, peer-to-peer payment apps and Buy Now Pay Later plans, than other generations.

Along the same vein, Gen Z often seeks out “self-serve” options along their digital banking journey that allow them to access information, tools and services without needing to contact their bank. A survey by Datos Insights, featured in a new Ethoca research report, found that about two-thirds of tech-savvy consumers would switch (or are willing to switch) banks for features such as dispute management, subscription controls and purchase return management that allow them to self-manage these activities through their digital banking app.[1] 

At the same time, 75% of consumers surveyed by Datos said apps must be easy to use or they won’t use them.

This all means it’s critical for banks to provide features that allow consumers of all ages to self-serve while making sure it’s a simple, intuitive experience.

2. Transaction clarity and control

Gen Z is also more cost-conscious than prior generations, according to eMarketer, meaning they want tools that help them have better insight into and control over their spending. They’re more willing to dispute a purchase on their payment card over service-related issues or because they don’t recognize a transaction on their statement—disputes known as first-party fraud or friendly fraud. 

In fact, 42% of Gen Zers surveyed said they’re willing to engage in first-party fraud, according to Fortune. That was significantly higher than other generations, with only 22% of Millennials saying they would. This high comfort level with first-party fraud suggests that merchants and issuers could see many more disputes and chargebacks in the years to come, despite that those have already been rising significantly over the past few years.

Offering digital receipts that increase transaction clarity by providing merchant and transaction details can help prevent first-party fraud while giving Gen Z the insight over their spending that they crave. The Datos survey found that 84% of consumers who didn’t recognize a purchase transaction within the past 12 months would have found it easier to investigate and resolve that issue if they had more details about the merchant and transaction.

Subscription management tools can also provide them with the digital experience they want while helping them control their spending without having to dispute charges. Interest in subscription controls made available through digital banking apps has been soaring, as a 2023 Datos survey for Ethoca found that about 90% of consumers would appreciate having access to these types of tools.

3. A commitment to environmental sustainability

Gen Z cares about the environmental sustainability practices of its financial institutions, with 51% saying that environmental, social and governance (ESG) concerns were important when choosing payment providers, the Ernst & Young survey found. That compares to 36% among older generations. 

Issuers are wise to focus on digital-first strategies that can help them bolster sustainability, whether delivering bank statements and other documents electronically or giving cardholders more insight into the carbon footprint of their spending decisions.

Winning over Gen Z

While the total customer experience is key, issuers can win over Gen Z by weaving together the convenience, visibility and spending controls they seek along with the sustainability measures that they look for in the companies they are loyal to. Older generations are still core banking customers that will also value the ease and convenience of a great digital banking and payments experience shaped by Gen Z’s preferences.

Ethoca Consumer Clarity™ makes it easy for issuers to give their cardholders the full experience—including digital receipts and subscription controls—and clarity they’re increasingly looking for. At the same time, it helps issuers and merchants reduce costly disputes and chargebacks—a win-win for everyone.