Zillennials demand that their payment options be quick and easy. This microgeneration — consumers born between 1991 and 1999 — is accustomed to seamless digital convenience. Rather than counting out cash or even digging into their wallets for credit cards, these consumers disproportionately want to be able to tap their phones and go.
As these young shoppers’ spending power grows, merchants will need to understand and be able to cater to their preferences. PYMNTS Intelligence researchers surveyed more than 2,500 United States consumers in August about their most recent payments. The study examined transactions across the grocery, retail, restaurant and travel sectors. The results illuminate how zillennials’ payment preferences differ from those of the rest of the population. As the data showcased, these shoppers expect to be able to transact instantly, frictionlessly and without much risk.
Zillennials Love Digital Wallets
Zillennials are embracing digital payments. They are more than twice as likely as the overall population to buy groceries using digital wallets. Nineteen percent of consumers in this age bracket used a digital wallet to pay for their last grocery transaction. Meanwhile, just 9% of the cross-generation sample did the same.
Groceries are not the only purchase category for which zillennials’ digital wallet use outstrips the overall population. Seventeen percent of zillennials paid for their most recent retail purchases using digital wallets, again compared to 9% of consumers in all age brackets.
Zillennials’ preference for this payment method is also pronounced for restaurant and travel transactions. The share of zillennials using digital wallets for their last restaurant purchases was nearly double that of other generations, at 23% versus 12%. Finally, 29% of zillennials opted to use digital wallets for their last travel purchases. In contrast, only 18% of the cross-generation sample did the same.
It seems that these young consumers expect greater convenience and ease from their payment methods than their older counterparts. In PYMNTS Intelligence research from last year’s study “Apple Pay @9: The Battle for In-Store Adoption and Usage,” 61% of mobile wallet users cited convenience as the most important reason for using the payment method for their last in-store purchases. Meanwhile, 60% cited this factor as the main reason they used the technology to pay for their last eCommerce purchases. Another 27% cited ease of use as their key motivation for using mobile wallets in stores. The same share cited this reason for using them in eCommerce.
As such, zillennials’ embrace of digital wallets reflects a shift toward prioritizing frictionless financial transactions in-store and online. As digital wallets evolve, zillennials’ reliance on them underscores the growing importance of instant, hassle-free payments in all settings.
Zillennials Don’t Bother With Cash
Zillennials are using less cash than other generations, reflecting the broader shift toward more convenient payment options among younger consumers. Take, for instance, dining. At restaurants, 11% of zillennials paid with cash. This figure is 37% lower than the 17% share of consumers across generations who did the same.
When shopping retail, zillennials are one-quarter less likely to use cash than the overall population. Only 9.2% of zillennials used cash for their last retail purchases, compared to 12% of all consumers.
This decline in cash use could be occurring partly because the habit of using cash is not as deeply ingrained in these younger consumers. PYMNTS Intelligence findings from last year revealed that habit is one of the main reasons people carry cash. Conversely, 51% of consumers using cash less often cited convenience as a key reason for switching to other payment methods.
This drop in cash use could be another factor contributing to young consumers’ increased adoption of digital wallets. The 2023 study revealed that 26% of consumers who do not carry cash use PayPal instead. Plus, 15% use Apple Pay instead, and 14% use Cash App and Venmo.
The generational gap in cash use is smaller when buying groceries. The August 2024 study revealed that 12% of zillennials paid for their most recent grocery purchases with cash. This share is just two percentage points below the 14% for all shoppers.
The smaller gap in cash use for groceries suggests that essential, everyday purchases may still warrant occasional use of physical money. The most common reason consumers still carry cash is for small purchases.
Zillennials’ declining use of cash, particularly in dining and retail, highlights their preference for more convenient, tech-based payment methods. While the shift is less pronounced in grocery purchases, the broader trend toward quicker, easier payments is clear.
Zillennials Hesitate to Use Credit Cards
Zillennials are more hesitant than older generations to put their finances at risk by using credit cards.
Only 24% of zillennials paid for their last grocery purchases with credit cards, compared to 32% of consumers across generations. In retail, just 25% of zillennials used credit cards, below the 34% average for all consumers. The gap is similar in dining. Twenty-two percent of zillennials used credit cards for their last restaurant purchases, compared to 31% of the overall population. For travel, 26% of zillennials paid with credit, while 44% of the general sample did the same.
It would seem that zillennials are comparatively risk-averse when it comes to how they make payments. Findings from PYMNTS Intelligence’s “New Reality Check: The Paycheck-to-Paycheck Report” illuminated why some consumers avoid credit cards. Fifty-one percent of consumers with no credit cards cited the desire to avoid accumulating debt as a key reason. Thirty-two percent said it is the most important reason they do not have a credit card. The second-most common reason for not having a credit card, cited by 36%, was the wish to prevent overspending.
Conversely, zillennials are likelier than older generations to favor the security of paying with debit cards. Forty-one percent used debit for their last grocery purchases, above the 39% across generations. Similarly, 41% paid for retail items with debit cards, compared to 37% of the broader population. Thirty-eight percent of zillennials used debit for their last restaurant visits, versus 34% of consumers overall. For travel, zillennials aligned more closely with others, with 26% opting for debit, just shy of the 27% overall.
Zillennials’ cautious approach to credit card use highlights their preference for financial security and aversion to debt. Instead, zillennials increasingly turn to debit cards, which offer more immediate financial control and reduce the risk of falling into debt.
Read More
The Zillennials MonitorEdge Report Series from PYMNTS Intelligence explores the behaviors and expectations of this microgeneration in greater detail. Keep reading to learn about how and why they make purchases and about the factors shaping their personal finances.
