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Consumer Payment Preferences Across Generations

Credit and debit offerings need to appeal to each group where they live, and that’s increasingly digital.

From contactless cards to mobile wallets to real-time payments and myriad others in between, today’s consumers are faced with a seemingly endless list of payment options. According to PSCU’s 2019 Eye on Payments study,convenience and ease of use were reported as the main drivers behind respondents’ choice in payment method. While these two factors were ranked most important, security and safety weren’t far behind, with nearly four in 10 consumers agreeingthey make decisions about how to pay for something based in part on which is the most secure.

There are some key differences when it comes to how and why payment method preferences differ among generations. Understanding these differences can enable credit unions to better meet member preferences in a variety of payment scenarios and life stages.

Baby Boomers

Baby boomers prefer plastic, with 77% selecting debit or credit as their primary preferred payment methods. This generation has been the victim of identity theft or card fraud more than any other generation surveyed, and they stand to lose more moneythan other age groups when they are victims of fraud. Secure mobile banking, swift fraud detection, and mobile alerts and controls, as well as continued education about card fraud, identity theft, and how to use mobile card management tools, are crucialfor keeping baby boomers safe and loyal.

Generation X

Gen X has the highest preference for debit, with 50% of respondents ranking the payment method as their first preference. When it comes to rewards, Gen X prefers being rewarded with low interest rates more than other groups, perhaps an indication of thegeneration’s high debt burden. Gen X-ers are looking for financial providers to be trusted resources. Budgeting tools, convenient mobile banking, and rewards like cash back and low interest rates will build loyalty and help relieve the financialstrain on these consumers.


Older millennials (ages 31-38) are frequent online shoppers who are comfortable using their debit cards for online purchases. Nearly half of consumers in this generation report debit cards as their primary payment method. Their mobile wallet usage alignswith that of Gen Z, with nearly 40% using the payment method at least a few times per month. They are also the most frequent victims of fraud and identity theft, according to reports gathered by the Federal Trade Commission. A strong focus on safety,including easy access to mobile alerts and other preventative tools, will go a long way with this generation.

Consumers in the younger millennials age group (ages 23-30) are experiencing many of life’s firsts, like their first job after college, first child, etc. Members of this generation are looking for financial partners to support themduring their journey, particularly through robust rewards programs that offer choice. Like their younger counterparts in Generation Z, younger millennials are open to new payments technology: they are the most active users of mobile wallets, with8% using the payment method daily and 16% using it a few times per week. Looking to this group to identify trends and gain insight is crucial.

Generation Z

Because these consumers are either in college or just beginning to enter the workforce and have not yet built a strong credit base, they are less likely to use credit cards than their older counterparts. Gen Z likely represents the future of mobile wallets,with nearly 40% using the payment method at least a few times per month. The largest generation in American history, this group never knew a world without mobile phones or the internet. This creates an opportunity to promote technology like contactlesscards and mobile wallets to a large number of tech-savvy consumers. Educating this young group about card fraud risks and precautionary measures like mobile phone alerts is key since debit is their preferred payment form.

Key Takeaways

Financial goals will change depending on personal situations and life stages. In order to help members achieve their goals, credit union offerings should evolve and align with consumers’ needs throughout all phases of their financial journeys.

In his role as SVP, Chief Marketing Officer, Tom Pierce is responsible for leading and executing PSCU’s marketing and communications strategy. Pierce has successfully led marketing teams for more than 30 years, with the latter half of his career spent in the payments industry. Prior to joining PSCU, Pierce served as Chief Marketing Officer for Cardtronics, a global ATM organization serving the retail and financial services industries, where he directed a global marketing team in the development and execution of strategic marketing and communications initiatives.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
April 6, 2020

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