Gen Z isn’t killing cash — They’re killing inconvenience

A version of this article first appeared in the July BAI Executive Report: Keeping pace with the payments evolution. You’ll find additional thought leadership articles within that explore consumer behaviors, how financial institutions are updating operations to connect with leading payments rails, and more of what lies ahead for this space.

For years, financial commentators have blamed Millennials and Gen Z for the slow death of cash, checks and even credit cards. On the surface, the narrative is simple—younger generations prefer apps over banks, mobile wallets over plastic cards, Venmo over cash.

But the reality is more nuanced— and far more interesting.

According to the 2024 Primax Payments Pulse study, which gauges the current state of payment preferences for 1,850 bank customers and credit union members, the most preferred payment method across all generations, even digital-loving Gen Z, is actually the credit card.

In 2024, credit usage spiked among Gen Z customers, replacing debit as their most preferred payment method.

Surprised? You shouldn’t be. While Gen Z is the most likely of the generations to use new and emerging payment options, they aren’t rejecting traditional payments; they’re rejecting payment experiences filled with friction, inefficiency and a lack of transparency. Gen Z isn’t anti-cash or anti-card. They are anti-inconvenience. And they’re not alone. Payment preferences of Millennials, Gen X and even Boomers are showing that it’s not about the tools or technology. It’s about the payment experience.

The real driver behind payment preferences is experience

While many focus on payment formats, the Primax Payments Pulse study cuts through the noise, instead focusing on what experiences consumers are craving. Consumers of all ages, especially younger ones, are gravitating toward payment experiences that offer ease and speed, security and control, and rewards and value.

For example:

• If it isn’t easy and quick, they aren’t doing it. Today’s consumer is discerning. They won’t stick with a flashy new fintech app if it doesn’t deliver real value. If a card doesn’t offer easy integration with rewards programs, they’ll move on. If a P2P platform delays transfers or comes with confusing fees, they’ll find something better.
• Security isn’t a side note, it’s a dealbreaker. Data breaches and fraud headlines are non-stop, and consumers are hyper-aware of the risks. Card issuers and banks that invest in proactive fraud prevention, real-time account controls and alerts, as well as other user-friendly security features, will earn lasting trust.
• Rewards equal more “bang for their buck.” Consumers of all ages like deals, especially in today’s uncertain economy. Three-quarters of survey respondents say that rewards are important when choosing whether to use their debit (73%) or credit card (75%). There’s nothing better than figuring out how to take a summer vacation by cashing in on your reward points. It’s exhilarating and encourages the continued usage of that card.

Also, there’s a growing openness—across all age groups—to using newer payment options such as text-based payments, QR code scanning and P2P platforms. Not because they are the newest shiny tech, but because they are convenient for how consumers live, work and exist—how they experience life—in today’s world. We live in a gig economy and celebrate the pursuit of side hustles to get ahead. This has helped P2P payments thrive in situations with friction. A high school tech whiz fixing iPhones for tips isn’t taking credit cards and doesn’t want to carry cash.

Yet, even as they embrace new innovative technology, consumers aren’t abandoning traditional tools like credit cards, they’re just using them in smarter, more integrated ways that improve user experience. This is why credit cards still dominate across generations. They deliver the expectations of today’s consumers.

‘Frictionless’ has arrived

So, what should financial institutions do to give the people what they want? Stop designing payment strategies around generational stereotypes and focus on meeting the experience expectations of today’s consumers—speed, simplicity and convenience.

Here are three ways to reduce friction and elevate the experience for consumers of all ages when it comes to payment methods, particularly credit and debit cards:

Simplify applications. Streamline digital applications by minimizing the required fields. Many financial institutions ask for excessive information, deterring would-be applicants.

Embrace instant decisions. Adopt real-time underwriting processes. Leading banks and fintechs are already making applicants’ decisions immediately, setting a new standard for responsiveness (which today’s consumers already expect in the on-demand world we live in).

Enable mobile wallet integration. Issue digital cards directly to mobile wallets, supporting a seamless, real-time experience.

By implementing these experience elevations, you will reduce friction for your customers. This also signals that your financial institution is keeping pace with today’s modern, digital experience expectations.

Competing in a crowded market

Creating a competitive credit card product is the easiest part of the process—it’s turning the financial dials to find the right combination of rate, rewards and introductory offers. Those are table stakes if you want today’s consumers to even consider banking with you. Once you’ve reached that competitive baseline of product value and application experience, how can you differentiate your FI’s card offerings from large banks and fintechs?

Stand out by focusing on the following elements:

Design: Use bold, modern card designs to grab attention and reflect your brand’s personality. Offering physical cards that are manufactured out of sustainable materials is also an attention-grabber for today’s eco-conscious consumers.

Affiliate appeal: Partner with universities, organizations or sports teams to tap into built-in loyalty and expand your reach. The profitable math is harder but the acquisition opportunities are tremendous.

Final thought: Don’t fight the format, fix the experience

Consumers aren’t asking for either/or payment experiences—they’re asking for and/or. They want the ability to tap their phone or swipe a card. They want to use Venmo to split dinner bills and their credit card to book a flight and get travel rewards. They want financial tools that adapt to their needs and experience expectations, not the other way around.

Financial institutions that embrace the experience mindset will win the loyalty of Gen Z —and consumers of all ages. Those who cling to rigid systems and assumptions about what different generations want based on age will continue to lose relevance.

Consumers want convenience and security, regardless of what form their payment takes. So, Gen Z isn’t killing cash, checks or credit cards. They’re killing everything that makes paying — and getting paid — harder than it needs to be.

Ryan Myers is SVP, Consulting, at Velera.