Looking to attract Gen Z to your brand? Innovate your Payments

This is part 1 of a 2-part series. Part 2 will be published Wednesday over on the Future Commerce Insiders newsletter. Sign up here to be notified when it drops.

To Attract Gen Z, Brands must innovate in Payments

Once upon a time when I worked at an eCommerce brand, the most innovative tech in payments was not requiring a customer to choose what card they were using from a dropdown menu. The year was 2009 and we had written some custom Javascript that sensed the card based on the first digit entered, and updated a logo near the input field to show them we recognized their Visa or American Express.

That was 11 years ago. To put it mildly, times have changed. There have been 3 major changes in payments in the past 10 years – wallets, installments, and subscriptions.

Digital wallets are cool again

Today merchants have more choices than ever when it comes to payments. Customers no longer are checking out with just a credit card. As many as 20% of transactions from Something Digital customers are taking place in payment wallets like Paypal. Paypal is no longer the only wallet consumers have to choose from, either. New entrants include:

  • Amazon Pay
  • Gpay (Google Pay)
  • Apple Pay
  • Shoprunner


And a new entrant, Shop Pay. ShopPay is a new consumer product from Shopify that is entering the payments space.

Shop Pay is a new consumer payments product from Shopify


While it may seem like a crowded marketplace, payments technology continues to evolve. Paypal has made a sizable investment in many areas of payment technology including in brick-and-mortar and contactless payments, in addition to the peer-to-peer technology that put them on the map.

Paypal products Braintree and Venmo are the modern solutions to modern payments problems. Generation Z (children and young adults born after 1999) use the Square Cash app and Venmo to share expenses.

According to Business Insider, over 50% of Gen Z-ers use digital wallets every month. They’re here to stay, and we’re likely to see additional options in the marketplace in the years to come as Facebook and Instagram move further into Commerce.

As Gen Z ages we’ll be tracking their consumer habits and trends. This is a topic we’ve covered in depth on Future Commerce, most recently in our article about the Generation Z psychographic, CARLY, which is an acronym for “Can’t Afford Real Life Yet.”

CARLY is a consumer who finds brands that align with her own ideologies, and appeal to her economic and political sensibilities. This isn’t to say that CARLY has no money, she decides to use her money to cast a vote for the products, brands, and celebrities who she most identifies with.

CARLY, it would seem, is a big fan of digital wallets and installment payments.

2020 will be known as the year of installment payments

Installments payments are on the rise. Paying over time for a large-ticket purchase is no longer just an option, it has become quite commonplace. With more consumer offerings available now than ever before, installments payments vendors such as Klarna and Affirm aren’t just offering pay-over-time capabilities for high-ticket items anymore.

In the past year Klarna has secured 30+ brands that you likely frequent. Adidas, Sephora, Michael Kors, ASOS, Nike, IKEA, Abercrombie & Fitch — even H&M — they’re all Klarna customers. With installment payments moving down to fast fashion, one has to wonder if we’re becoming over-leveraged in debt with these non-traditional credit vendors? Is it any wonder, too, that these are brands frequented by the under-30 crowd? They’re brands you can find at the mall, and Gen Z, apparently, loves the mall.

Installments are being rolled out through private merchant financing, too. Fort Wayne, Indiana-based music instrument dealer Sweetwater has had a 3-pay option for a decade that they manage in-house. Unsurprisingly, Amazon has the option available to split into fractional payments on some their product detail pages, as well.

PMNTS magazine found in a reader poll recently that 52% of millennials believe it’s okay to go into debt during the holiday season. I guess gaining weight during the winter applies to more than just your waistline nowadays!

Subscriptions fatigue isn’t here yet

Amazon set the standard with ‘Subscribe and Save’, their consumer product that offered a percentage discount to put product ordering on autopilot. The program has been offered for over 10 years, and many 3rd party payments platforms have emerged to help eCommerce brands compete against the Seattle-based behemoth.

Some of these vendors, like Ordergroove, offer a site experience similar to that of Amazon — where the consumer is given the power to pause, modify, and cancel any subscription. They can adjust frequency, update cards on file, and change delivery dates with ease.

This comes at a time when consumers demand flexibility in payments, and particularly in subscriptions. This might be because eCommerce subscriptions have risen over 3000% in the past 8 years alone. According to Hitwise, by 2016 there were over twenty million active subscription box customers in the United States.

Birchbox and Dollar Shave Club accounted for more than half of all subscription boxes in 2016, but the category has grown steadily ever since. Nowadays the likes of BarkBox, FabFitFun, and even the popular murder mystery game, Hunt A Killer, are innovating in the subscription category.

On the horizon: one page checkouts

The future looks bright for eCommerce brands who can innovate as fast as payments vendors. The real challenge is being able to manage the growing consumer demand for their favorite payment platform while not robbing from your brand’s power. Many checkouts with dozens of logos begin to feel like a NASCAR race car. More logos, and more checkout fatigue.

Your choice of payments are also usually at the mercy of the eCommerce platform you’ve built your digital business upon. If you’re on Shopify it’s most likely that you’re using Shopify’s payments platform, or the newer Shop Pay. If you’re doing subscriptions on Shopify or on Shopify Plus, it’s likely you’re on Recharge.

Magento merchants have a wider availability of options. But this paradox of choice may make it hard to choose a specific vendor or technology payments platform.

This quagmire may be why there is growing interest in total checkout replacement technologies, like Bolt and Fast.

These technologies, and others like them, replace the existing checkout in your eComm platform and replace them with a one-page checkout that is built around speed and choice of shipping, payments, and logistics integrations.

It’s an interesting time to be a retailer making an investment in payments, to say the least.

More to read: peer to peer and the evolution of local business

For even more thoughts on the future of digitally-enabled retail business, especially those focusing on serving a local geographic region, like a bakery or a tailor.

We’re continuing the conversation over on the Future Commerce Insiders newsletter on Wednesday this week! Subscribe to Insiders now so you don’t miss part 2 when it drops.

Phillip Jackson

A multi-instrumentalist, Phillip is an avid collector of vintage guitars, keyboards and amplifiers and has a home studio located in West Palm Beach.