The pandemic continues to affect consumers’ spending preferences as more and more of them trend toward emerging solutions like contactless transactions, peer-to-peer (P2P) payments and mobile wallets, sometimes for the first times in their lives. Many consumers — especially those from younger generations — are eager to pair trusted and familiar products like debit cards with these emerging payment methods to help them to better monitor their transactions and avoid credit card debt during what can be a financially challenging time.
Financial services providers that offer these younger consumers debit solutions and relevant digital tools could reap considerable profits, but doing so is not without challenges. Consumers from younger generations may be unfamiliar with payment products in general as well as how best to use them, making it crucial for debit issuers and merchants to offer resources that can help them navigate the space.
The May Next-Gen Debit Tracker® explores the latest developments in the next-gen debit space and the factors that are driving debit usage among millennial and Generation Z consumers, as well as the challenges issuers and merchants face as they work to further boost adoption.
Around The Next-Gen Debit World
The pandemic is highlighting different generations’ unique and changing payment preferences, with Gen Z and millennials seeking frictionless debit-based mobile experiences. These younger consumers have high expectations, with a recent survey finding 75 percent of millennials said they would even be willing to switch providers to access better mobile journeys. Gen Z consumers also expressed notable enthusiasm for debit cards, with 44 percent ranking the payment tool as their most preferred payment method.
New research indicates that even more Gen Z consumers would take advantage of debit-enabled mobile solutions if they were more knowledgeable about managing finances. A recent study that almost three quarters of Gen Z consumers admitted to lacking confidence in personal finance matters and 73 percent expressed interest in more education on these topics. Financial service providers could seize this opportunity by rolling out financial wellness programs targeting these consumers.
Another recent report found debit cards eclipse all other payment methods in popularity for 36 percent of all United States consumers, with credit and cash coming in second and third at 24 percent and 18 percent, respectively. This preference for debit was exhibited by all age groups and genders, though debit preferences by region was found to be the survey’s lone outlier: credit managed to take the number one spot in the Northeast.
For more on these and other stories, visit the Tracker’s News & Trends.
Webster Bank On How The Pandemic Has The Increased Reliance On Debit
The pandemic has fueled a shift to contactless payments and debit as consumers sought more hygienic methods of payment. Debt-wary Gen Z and millennial consumers — as well as the proliferation of stimulus payments and small business loans — are also driving debit use as consumers look to access these funds via their debit cards. In this month’s Feature Story, Desiree Wolfe, senior vice president and director of product services for Webster Bank, explains the payment behavioral shifts she has witnessed during the pandemic as consumers aim to pump the brakes on overspending and look for safe, convenient alternatives.
To learn more, visit the Tracker’s Feature Story.
Consumers choose payment channels that represent their lifestyle, current financial goals and how concerned they are about taking on debt. Millennial and Gen Z consumers prefer to use debit rewards programs as they experience many firsts such as buying their first cars, getting for their first jobs and having a child — and they are often looking for financial partners that can support them through these stages. This month’s Deep Dive examines what is driving the use of debit among these generations and how financial institutions can help shape their financial lives.
Visit the Tracker’s Deep Dive to read more.
About The Tracker
The Next-Gen Debit Tracker®, a collaboration between PYMNTS and PULSE, a Discover company, examines consumers’ changing payment behaviors as well as the innovations that are reshaping how they use debit.
May 13, 2021 at 09:02AM