Bill pay is an important part of attracting and retaining accountholders. Almost half of consumers have stated that online bill pay is the reason for choosing a primary financial service provider. Bill pay is quickly growing along with the number of Zoomers, an age group spanning from 11 to 26 years old, whose financial journey is also on the rise. In order for businesses to keep up with Gen Z’s billing and payment needs, it’s crucial to understand what they’re looking for in their billing and payment experience. As a Zoomer myself, I’ve been able to observe how my generation approaches bill payments and why certain methods are preferred over others. In this blog, we’ll explore how Gen Z prefers to pay their bills and their preferred methods of payment.
31% of Zoomers have said that they found the bill payment experience to be stressful— either always or most of the time. This is an opportunity to provide better options of how to pay and when to pay. To keep up with the desire for multiple billing and payment options, businesses need an EBPP system that offers a variety of payment methods e.g., debit, credit, Apple Pay/Google Pay, cash, or ACH, payment options e.g., one-time or recurring, and payment channels e.g., pay by text, intelligent assistants, or mobile. As a generation that values convenience and speed, Gen Z prefers to pay their bills using electronic payments such as debit cards and ACH transfers. As a Zoomer, I would attribute this preference to several factors.
Debit cards are easy to use and provide instant payment processing. Unlike credit cards, which can come with interest rates and fees, debit cards use funds that are currently available. This means that users can avoid accumulating debt and making interest payments. A lot of individuals in this generation are just starting their careers, newly coming out of college and starting new jobs. For that reason, they are extremely cautious about racking up debt or simply do not qualify for credit cards just yet. Hence, making debit cards the preferred card option.
The larger majority of Zoomers (myself included), tend to opt for ACH and debit card payments, with 33% using debit and 41% using ACH payments (see below graph). A big reason for that is the safety and convenience that come with these types of payments. ACH transfers are automatic and do not require any manual intervention. They also reflect how much you have in your account in real-time which helps with future financial planning. Another reason that Gen Z prefers ACH transfers is that they’re often free. Unlike other payment methods, such as credit cards, ACH transfers do not come with transaction fees. This is important considering this generation may not have a lot of disposable income. By using this method, they can save on transaction fees, allowing that money to be used for other expenses.
Percentage of 2023 U.S. Bills Paid by Method by Generation
A significant part of these preferences can be attributed to the fact that Gen Z specifically is a digital-first generation. They are digital natives that want things to be done at a click of a button—and see no reason why banking should be less convenient than calling an Uber or ordering a pizza. Billing and payments experience expectations are no different.
Unsurprisingly, when it comes to payment methods, smartphones are the first choice, with 80% of Zoomers logging in to their financial accounts using a smartphone at least once a week (see graph below). With the rise of mobile banking apps, paying bills has become easier than ever. Smartphones offer a seamless experience in which transactions can be completed with just a click of a button. It’s a device that they always have with them and with this payment method, it takes little to no time to complete the transaction. Another advantage of paying bills through smartphones is the ability to set up automatic payments. 34% of Zoomers said they were nervous about whether or not they’re able to remember to pay their bills. With automatic payments, they have the ability to pay bills automatically on a set schedule, eliminating the need to remember to make payments each month.
Percentage of Consumers With a Financial Institution Relationship Who Log In to Their Financial Accounts Using a Smartphone at Least Once per Week
Zoomers want a modern payment experience that is quick, easy, and convenient. By understanding these preferences, businesses and financial institutions can provide a modern payment experience that meets their needs. In today’s digital first world, it’s important to have a digital bill payment solution that provides a payment experience that is quick, secure, and convenient. By doing so, businesses can attract and retain Gen Z customers and remain competitive in the marketplace.
Read more about Zoomers in Zoomers: How Much Do They Value Real-Time Payments?
Alacriti’s Orbipay EBPP is a customizable electronic billing and payments solution for businesses and financial institutions of all sizes. Orbipay EBPP offers convenient and flexible choices that include all the payment channels, payment methods, and payment options expected from a modern digital bill pay experience. For more information, please contact us at info@alacriti.com.
