Millennials are increasingly affluent, and the highest spenders in comparison to other generations Image Credit: Supplied

How is Gen Y and Gen Z shaping the future of payments?

Most millennials and Generation Z demand a friction-free, secure, and personalised mobile payment experience. Having grown up in an era of digital globalization both millennials and Gen Z have an easier time adapting to new technology and payment methods.

Millennials are the heaviest users of smartphones and their attitude towards technology sets them apart from other generations. They like to be kept updated with real-time alerts through SMS or email, they value any analysis or categorisation of their spending, prefer complete control of their account information and card usage, seek out personalised products and services and most importantly, they demand a frictionless, high-quality user experience across their digital devices.

In our view, with millennials, it is important to shift from product-centric to a customer-centric approach, where products and services are more tailored and varied in order to meet the needs of different demographics, whose preferences, accessibility and delivery are increasingly omni-channel.

- Shahebaz Khan, UAE General Manager for Visa

Gen Z consumers are similar to millennials but also different in some ways. Gen Z consumers are expected to be more entrepreneurial in their mindset and will see technology and new ideas as the great enabler. Of all the generations, they are the most comfortable using technology for financial transactions. Once Gen Z consumers enter the workforce by 2020 – their habits, preferences and understanding of the internet of things will change the future of payments.

Both Gen Y and Gen Z are digitally savvy and demand to be connected always and be able to buy immediately through a seamless mobile payment experience. Therefore, they will steer away from brands that don’t keep pace with their need for on-demand, highly personalised experiences.

How does Visa meet millennials’ expectations in payments?

Millennials are attracted to fintechs and this is because they have learned to thrive in a connected world and brought up with the expectation of on-demand and instant gratification. Another factor to note is that majority of those behind fintech start-ups are millennials themselves, so they are able to cater to the digital experiences their generation of consumers seek and are familiar with.

Visa has taken this into consideration, having understood millennials’ mindset for speed, convenience, efficiency and multichannel accessibility, Visa is expanding its Fintech Fast-Track Programme across Central and Eastern Europe, the Middle East and Africa as part of its efforts to develop the next generation of digital payment solutions and enable companies to deliver new technologies and services in line with millennials’ expectations.

Based on your experience, what is the spend and payments patterns of millennials?

Millennials are increasingly affluent, and the highest spenders in comparison to other generations. However, while they’re known for being active consumers, they’re also conscious about saving. Millennials find a greater sense of satisfaction and empowerment with digital payments compared to that of cash as digital payments increase their purchasing power, providing them with easier and more convenient access to credit when they need it. Additionally, the Visa study highlights that millennials are also attracted by the different types of rewards, loyalty programs and offers that digital payments support.

Even in the GCC, millennials are increasingly spending online – with electronics and clothing capturing the greatest frequency of spend, and travel accounting for the greatest volume of spend, according to a Visa study. Most of these online purchases are made through digital channels. Millennials are open to new and emerging payment technologies such as mobile payments and digital wallets like Apple Pay, Samsung Pay and Google Pay as they are innovative, secure, convenient and seamless.

How can payment providers win over the millennials?

In our view, with millennials, it is important to shift from product-centric to a customer-centric approach, where products and services are more tailored and varied in order to meet the needs of different demographics, whose preferences, accessibility and delivery are increasingly omni-channel.

Issuers and merchants should also not miss out on the opportunity to capitalize on this trend by enabling their payment terminals for contactless transactions and investing in contactless-enabled POS infrastructure. This should help enable them to tailor their services to better serve millennials, who are opting for more convenient ways of transacting.

Also, millennials are careful with their information, and when giving personal information they need to know that their data is being protected, what the terms and conditions are, and what the information being collected will be used for. So, they have high expectations from providers when it comes to data security.

Overall, millennials expect a seamless journey across touch points, while receiving real-time information and alerts.