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Preferred Payment Options


27 September 2018

Victoria Galloway

6 minute read

What are the preferred payment options of different age groups?

You’ve probably given a lot of thought to what types of payments you’ll accept from your customers. There is an abundance of payment methods you can offer your customers: credit cards, debit cards, cash, mobile wallets, peer-to-peer payments and more. But at the end of the day, it’s natural to be inclined to payment methods that are most convenient to how you run your business.

And to a certain extent, this makes sense. The payment methods you accept influence a variety of factors, like the equipment you will need to purchase, the transaction fees you will pay and the level of fraud risk your business may face.

However, there is one important factor you may pay a heavy price for overlooking: Customer preference.


First and foremost, you must know your customer so you can gain better insight into their shopping behaviours and, consequently, their preferred payment methods. This will allow you to meet their expectations and provide payment options that are mutually beneficial.

Start by considering some of the distinctive differences between your target audience. Gender and income level have been shown to influence preferred payment methods. And of course, each generation has its own unique characteristics and payment preferences.

Gen Z and millennials prefer mobile payment methods and apps while Gen X and Baby Boomers are more likely to utilise credit and debit cards. However, the data does show that all consumers, regardless of age, are beginning to move away from traditional payment methods and toward digital payments in an increasingly cashless Australia.

47% of consumers prefer digital payments as opposed to the 45% that prefers cash, a study found. And this difference is only expected to increase in the years to come. Only a small majority still choose to pay with checks; in fact, experts are predicting that paper checks will be extinct by 2019.

With these trends in mind, let’s look at how generational differences, income, and gender influence your customers’ buying habits and preferred payment methods.

Generation Z prefers peer-to-peer & mobile payment apps

Gen Z is generally defined as anyone born between 1996-2010. They usually don’t get the same level of attention as millennials but don’t make the mistake of overlooking them. According to an article in Fast Company, they’ll make up 40% of buyers by 2020.

It probably won’t come as much of a surprise to learn that Gen Z is most comfortable using technology to make financial transactions. In particular, they prefer peer-to-peer payment apps that allow them to transfer funds instantly. The Pew Charitable Trust found that Gen Z uses mobile payment apps more than any other generation, with millennials trailing at a close second. Interestingly, one study found that Gen Z consumers also tend to be more budget-conscious than millennials.

For that reason, they tend to prefer technology that lets them share purchases with friends. Though they primarily shop online, they do prefer retailers with both an online and brick-and-mortar store.

Millennials love mobile wallets, don’t always prefer credit cards

Millennials were born between 1981-1996 and like Gen Z, they are very comfortable using mobile devices to make payments. Data from Pew Charitable Trust showed that 90% of millennials own smartphones and 50% regularly use their mobile devices to make purchases.

They are more likely than Baby Boomers or Gen Xers to use a mobile wallet or peer-to-peer payment apps. And 30% of millennials use PayPal as opposed to 15% of Gen Xers and Baby Boomers. 40% of millennials choose to access PayPal on their mobile device.

But while they are comfortable using technology, most millennials prefer not to use credit. A Bankrate survey found that 33% of younger millennials don’t own any credit cards. For millennials, credit card use seems to increase with age; 55% of older millennials own a credit card.

Generation X and Baby Boomers are inclined towards credit and debit cards

Gen X consumers were born between 1965-1980. They aren’t quite as tech-savvy as the previous two generations but they can hold their own.

The majority of Gen Xers own smartphones and nearly half are willing to use mobile payments to make a purchase. Gen Xers are more heavy credit card users than any other generation, reveals a survey. And only 42% repay their credit card balances in full each month so they are more likely to have credit card debt than other generations.

There are currently about 5.5 million Baby Boomers in Australia, which is the generation born between 1946-1964. Over their lifetime, they have seen massive changes in technology. They are more likely to use credit cards but unlike Gen X, most Baby Boomers pay their balances in full every month. Baby Boomers prefer to pay in cash but 33% in the U.S. have used mobile payments and 17% have used peer-to-peer apps.

And although there is a common stereotype that says Baby Boomers still insist on paying with checks, the reality is that only 13% Baby Boomers in the United States do so and most prefer to make payments with debit cards.


Of course, age isn’t the only factor that influences a customer’s favourite payment method. Income and gender seem to play a role as well. The data seems to indicate that the more money consumers make, the more likely they are to prefer electronic payment methods.

A survey by the RBA in Australia found that “the average cash payment at merchant categories where more non-discretionary spending occurs (e.g. supermarkets) was broadly similar across income groups.” However, what’s interesting is that the share of the cash payments (in terms of value) dipped as household incomes went higher.

This is similar to the trend elsewhere in the world. The Diary of Consumer Payment Choice found that 48% of households in the U.S. earning less than $25,000 annually prefer paying in cash, whereas 39% of households in the $100,000 and $149,999 income range prefer credit or debit cards. Only 19% of these high-income households prefer cash payments.

And gender plays a role in buying preferences as well. Men have been quicker to embrace both online shopping and mobile payments, though women have caught on quickly. Overall, men prefer a convenient shopping experience while women prefer stores that will help them find precisely what they need.

But when it comes to online shopping, convenience seems to be key for almost all consumers, regardless of age or gender. And having a website that is mobile-optimised can make or break most eCommerce stores.

A study by Forrester found that 73% of consumers will leave a poorly designed mobile website for one that makes purchasing easier. And two-thirds of all smartphone users prefer brands that provide a personalised shopping experience.

Of course, the purpose of this post isn’t to reinforce stereotypes. The purpose is to encourage you to begin thinking about your customer’s motives and what they are looking for in their shopping experience. Personalisation is key to attracting and retaining customers today.

Regardless of what generation your primary audience falls into, there is a payment method that will work for them. And for most businesses, this means that they will need to offer a wide variety of payment methods.

If this an area you struggle in, the good news is that the Bambora team can help. We make it easier to accept online payments while ensuring you’re compliant and your customers’ payment data is safe. Get in touch today to learn more!

About the author

Victoria Galloway is Bambora APAC's Technical Copywriter, and has been writing and producing int he payments and eCommerce space for a number of years in the UK and Australia.