ACI Worldwide’s recent ACI Speedpay Pulse report reveals a significant transformation in consumer preference for mobile payment options across generations, from Baby Boomers to Gen Z. But key generational differences still exist in the way people want to pay for things, which companies developing and marketing payments solutions need to consider.
In a recent webinar, Steve Mountz, Director, Product Marketing at ACI Worldwide, and Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research, discuss how various generations prefer to pay. Spoiler alert: Gen Z gets stressed about paying bills, whereas Millennials are more likely to use multiple digital wallets.
Overall, ACI Worldwide’s findings emphasize that businesses must adapt and offer a variety of payment options to accommodate all consumers.
Converging Generational Trends
ACI Worldwide looked at bill payment habits across four generations: Boomers (born before 1965), Generation X (born from 1965 to 1980), Millennials (born from 1981 to 1996), and Gen Z (born from 1997 to 2012).
For the most part, respondents across all age groups prefer digital channels, but the key difference is whether they drift to the browser or the mobile app.
“Boomers lean way towards website payments, while Gen Z and millennials prefer mobile more than they do the web,” Mountz said.
What’s more, nearly equal percentages from all generations—essentially the majority of each—prefer to pay with their checking account, but they differ in how they like to access those funds. According to Mountz, “Boomers use ACH and checks, while Millennials and Gen Z almost exclusively use a debit card.”
Boomers: Most Likely to Pay Via Check and Credit Card
Boomers, more so than their younger cohorts, prefer to pay with a credit card. In fact, 27% of respondents in this age group said as much, whereas lower percentages of Gen Xers (24%), Millennials (22%), and Gen Zers (17%) agreed.
The older group is also the least stressed about paying bills and the most likely to keep passwords on a piece of paper or in a notebook.
“Boomers have been doing this for a while. They’re not really stressed about the bill payment experience, but they are the most likely to write their bill payment passwords on paper,” Mountz said. “We found that actually 45% of Boomers are still writing their passwords on paper.
“They also only change their passwords when the biller makes them.”
“As a generation gets older, they become a little more set in their ways,” Keyes said. “It’s easy to write all your passwords on a piece of paper. It’s not the most secure option, but it’s easy. And this generation will likely keep operating the way they want to operate because that’s just how they’ve done it.”
Gen X: Most Likely to Forget to Pay on Time
Gen X has the greatest number of bills to pay and is the least likely to pay on time. That group also is the most likely to experience identity theft.
“Roughly 27% said they have been a victim of identity theft vs. about 25% of Millennials and only 14% of Gen Z,” Mountz said.
Gen X is also the most satisfied with the bill pay process compared with other age groups. “When we talk about the bill pay process, we’re talking about the speed, the security, the number of channels and methods they have available, as well as communication from their biller,” Mountz said.
Members of this group are also more likely to forget to pay their bills on time.
“When you have so many bills, it can be hard to keep track of all of them, especially as Gen X is not as digitally savvy as younger consumers,” Keyes said. “They might have a harder time simply keeping track of all their bills. If they don’t have a list somewhere or if they don’t have it all kind of compiled in a convenient place, it’s easier to just have a bill slip through the cracks.”
Millennials: Most Likely to Be Frustrated with Payment Processing Speed
Millennials have the greatest level of excitement for alternative payment methods and faster payments.
“Millennials came of age during PayPal and Venmo, and they want to pay their bills with them,” Mountz said. “In fact, 61% want to pay bills with an alternative payment method vs. about 27% of Boomers. However, they’re most frustrated with the payment processing speed or the lack of speed. We found that 40% of them are willing to pay some sort of fee to get faster processing of their bill payments.”
One surprise from the survey is that Millennials had the highest preference for digital statements compared with the other groups.
“Millennials came of age with all these digital options,” Keyes said. “They want everything they do to be fast—especially when you get a consumer-facing experience of Venmo or another app service where you send the payment to a friend and instantly the money out of your account goes into their account.
“Obviously, in the back end, there’s processing and it’s more complicated than that, but to consumers, it looks like they paid someone [instantly]. When you’ve seen that experience, you expect the fastest possible speeds, but that’s not always available—at least, not widely available.”
Gen Z: Most Likely to Be Stressed About Paying Bills
No generation is as stressed out about paying bills as Gen Z.
“When we asked consumers how they feel about the bill payment process, 31% of Gen Z found the bill payment experience stressful either always or most of the time,” Mountz said. “What’s more, 34% said they were nervous about whether or not they’re able to remember to pay their bills, and 49% said they get anxious. So, they’re generally stressed, anxious, and worried about whether they can cover their bills or pay them on time.
“We also see a high preference for in-person payments, which was kind of a surprise.”
According to Mountz, Gen Zers prefer to pay in person because they often have questions. “Maybe they’re making a huge tuition payment, and they have questions they want to ask before submitting it,” he said. “So they make those payments in person. We also see a lot of times that they want to pay in person at a third party like a Walmart or a Walgreens.”
Keyes added that the in-person preference may simply be because young people have more time on their hands and fewer responsibilities. “There are many Gen Zers who have children and are very busy, but many do not,” he said. “That gives them more time to go to a store for fun. Some may just go to a store because they have the time to do it—it’s more of an interesting experience.”
Generational Changes vs. Changes in the Life Stage
In surveys like the one from ACI Worldwide, it can be difficult to determine which generational differences are due to actual changes in outlook or habit and which relate to just being in a different life stage. For companies looking to forecast the demand for different kinds of bill pay products, distinguishing between these factors is essential.
As Keyes puts it, “This data overall really showcases that when you’re at different life stages, you take different steps to adapt. Most of these things are not so directly tied to habits of Millennials as a generation getting younger to older.”
For example, the ACI Worldwide study found that different generations made different lifestyle changes in response to inflation. But this doesn’t mean that the age groups actually think differently; they’re just in different life stages with different financial situations.
Yet, in some cases the generational changes are clear. This is most obvious in preferred payment methods. It is also the case in how close to a bill due date people pay their bills, with younger people paying their bills closer to the deadline.
“If you aren’t paying with a check and know you can pay close to instantly, then you’re more comfortable making an almost late payment because you know that if you make the payment a day or two before it’s going to be OK,” Keyes said. “And younger consumers seem to be more comfortable with that process.”
One new product that all age groups are interested in is “Request for Pay,” which ACI is working on launching with FedNow. “Almost everybody’s interested [in it] because it helps them avoid late payments,” Mountz said. “But for Millennials, it’s that payment confirmation. The funds will transfer immediately, and the confirmation of transfer will be instantaneous.”