The Young and the Cashless: Say Hello to Generation Z

The Young and the Cashless: Say Hello to Generation Z

The Young and the Cashless: Say Hello to Generation Z

John Carroll

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels.

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They're relatively frugal, hyper-connected and prefer cashless payments. They video blog, socialize on Snapchat and pay each other via Venmo. They have an average attention span of eight seconds. And they’re the most ethnically diverse and inclusive generation in history.

Meet the digital natives of Generation Z, the smartphone-first generation that follows the millennials. They are the kids of calamity born roughly between 1996 and 2010 ― who don't remember 9/11 but have never known a world without heightened vigilance toward terrorism.

Yes, they're young (the oldest are about 22), but they're also huge in numbers. In 2019, they will represent about 32 percent, or 2.5 billion, of the world’s population, according to analysis by Bloomberg.

That's a massive cohort of young people already shaping and changing the world of payments with their financial habits and preferences. Also known as the post-millennials, Generation Z is about to become a major force in financial services and payments as they enter the workforce as young consumers and entrepreneurs. And given their ability to navigate new technologies, Gen Z is the best-prepared generation for the digitization of money and financial services.

The Smartphone Generation: Gen Z is leading the way in mobile payments. 70 percent of them have made in-app mobile payments in the past year, more than any other generation.

"This is a generation that expects technology to make life easier for them when it comes to finances and banking," says David Stillman, a generational expert, national speaker and author of Gen Z @ Work: How the Next Generation is Transforming the Workplace. "They [Gen Z] demand an exceptional digital payments experience on all platforms, especially on their smartphones."

Indeed, while millennials are often referred to as the internet generation, Gen Z is the first generation to come of age with smartphones. And that has impacted how they bank, shop, save money, invest and make payments.

"Generation Z has never known a world where their phone isn't smart," says Stillman. "And their phones can do anything for them."

Driven by technology

According to generational expert and consultant Amy Lynch, Gen Z's financial and payment decisions are driven by technology, convenience and value.

"A high number of them save money for something specific," says Lynch, owner of Generational Edge in Nashville, Tenn. "And they want quality and value when they purchase. They don't place a high value on owning extravagant things."

In their still-abbreviated lives, Generation Z has experienced two major economic recessions that have impacted their families, notes Lynch, a baby boomer and grandmother of two Gen Zers.  Plus, they have always felt the threat of terrorism.

"Because of this uncertainty and instability, they are pretty frugal and fiscally conservative," she says.

The oldest members of Generation Z are in college and carry very little cash, preferring to pay with plastic or their smartphones, notes Lynch. Most don't have credit cards yet, but do own debit cards. They are also avid users of person-to-person payment apps such as Venmo, Zelle and PayPal, adds Lynch.

'A Venmo generation'

To learn more about Generation Z, who better to ask than the generation themselves?

"Most young people hate carrying cash," says Jacob Chang, 19, from Princeton, N.J. "It's just bulky and goes against the efficient mindsets that we have. There's also the convenience factor of paying with plastic or your phone instead of counting bills."

A sophomore at the University of Chicago, Chang also serves as the director of trends and marketing at JUV Consulting, a Generation Z consulting firm founded by two of his high school friends. The firm now has more than 50 consultants.

As far as money is concerned, Chang says most of Generation Z is not working yet, so the group is lucky to have any funds to spend.

"We respect money and want to use it in the right way to make smart purchases," says Chang, who interned in Hong Kong this summer and grew especially fond of WeChat Pay. "The money that we [do] have, we like to spend on experiences that we can share with friends, like eating out."

He and his three roommates also use apps to split the cost of monthly rent. "One guy pays rent, and we pay him back on Venmo," he says. "We are a Venmo generation of people."

Constantly connected

Gen Z is also a generation that is online almost all the time. Some 74 percent of Gen Zers said they like to spend their free time online either surfing social media or shopping, according to a recent study from the National Retail Foundation and IBM. The report also highlights how Gen Z has an affinity to shop online through sites like Amazon and eBay.

Connected to a digital world, Gen Z is also leading the way when it comes to mobile payments. According to the 2017 U.S. Mobile App Report, 70 percent of Gen Z consumers have made in-app mobile payments in the past year, more than any other generation.

Chang says what his generation needs next is a digital platform that combines all aspects of financial services from banking and payments to investing and receiving loans.

"We need an all-encompassing system. Something that is much more efficient than using multiple apps," he says. "That is what Gen Z is moving toward."


Gen Z on the move

They carry little to no cash and prefer to pay with their smartphones or payment cards. Here are profiles of three Gen Zers.

Jared Lefbom

Jared Lefbom

Age: 21
Hometown: Washington, D.C.
College: Senior at Georgia Tech
Age when he got his first smartphone: 15
Number of apps on smartphone: 102
Financial apps: Navy Federal Credit Union, Zelle, Venmo, Robinhood, Square Cash, Coinbase
Primarily pays with: Apple Pay, Venmo, debit card and credit card
Social media: Instagram, Twitter, Snapchat, Facebook
Shops online with: Amazon
Dines online with: Ritual
Shops in-store at: Marshall’s, Home Depot, outlets

Jacob Chang

Jacob Chang

Age: 19
Hometown: Princeton, N.J.
College: Sophomore at the University of Chicago
Age when he got his first smartphone: 13
Number of apps on smartphone: 45
Financial apps: Chase, Venmo, Robinhood, PayPal, WeChat Pay
Primarily pays with: Venmo, debit card and credit card
Social media: Instagram, Snapchat
Shops online with: Amazon
Dines online with: Uber Eats, GrubHub, Postmates
Shops in-store at: J.Crew

Kyla Bellinski

Kyla Bellinski

Age: 18
Hometown: Columbus, Ga.
College: Freshman at Columbus State University
Age when she got her first smartphone: 14
Number of apps on smartphone: 15
Financial apps: Bank of America, Zelle, Venmo
Primarily pays with: Debit card, Venmo
Social media: Instagram, Twitter, Snapchat
Shops online with: Amazon
Dines online with: Waitr
Shops in-store at: Old Navy, Target, boutiques

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by John

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels. His articles have published in the Atlanta Journal-Constitution, the Columbus Ledger-Enquirer, the Daily Report and Georgia Trend.

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