A new report, which examines consumer behaviour post-pandemic, reveals stark differences in attitudes to payments between generations, and also sheds light on the potential economic contribution of trends such as subscriptions and cryptocurrency payments.
The subscription economy is booming
More than a quarter (29%) of respondents said they took out more subscriptions in 2020 versus 2019, with an average spend of £25.32 per month equating to £304 per year. Subscriptions could therefore be realising a total of up to £20.39 billion per year for all British consumers.
This trend was however clearly driven by younger groups, with Gen Z and Millennials taking out an average of 2.1 and 1.75 subscriptions last year respectively, compared to just 0.55 for baby boomers.
Gen Z also spent the most on subscriptions with a monthly average of £31.46 (£378 annually), followed by £28.52 (£342 annually) for Millennials, £20.52 (£246 annually) for Gen X and £16.22 (£195 annually) for Baby Boomers.
Respondents from Greater London had taken out the most subscriptions per individual over the last year, with 2.06 on average, followed by those in the West Midlands with an average of 1.66, and those in the South East with 1.46. Consumers from the North East had the lowest average of 1.05 subscriptions per person, with Scottish respondents taking the second lowest of 1.17.
Changing attitudes to payments
PayPal was the preferred payment method online as chosen by over a third of UK consumers (34%) – rising to 46% of Gen X respondents and dropping to 24% Gen Z.
When asked how people expect to pay online in five years’ time, almost 1 in 6 (15%) of Gen Z and just over 1 in 10 (11%) Millennials thought digital wallets would be their go-to method, with 10% respondents overall.
This means that by 2026, digital wallets will account for more than £11 billion in online spending. The predicted figures are an increase from 11% Gen Z, 5% Millennials and 6% of all respondents listing digital wallets as their preferred method today, demonstrating a considerable growth in popularity due over the coming years.
Crypto also saw a rise in popularity with 4% of all age groups expecting to use it as a preferred payment method in five years’ time versus 1% today.
That could equate to as many as 2.68 million people nationally, or £4.4 billion in online payments being made in cryptocurrency in the UK annually, by 2026.
By comparison, the top three most popular payment methods today (PayPal, debit cards and credit cards), are all set to decrease in popularity with debit cards dropping the most, from 33% today, to 28% in five years’ time.
Buy Now Pay Later (BNPL) was another popular payment method, with 37% saying the service encouraged them to buy. 38% were neither encouraged or discouraged, and 19% were discouraged to buy.
Younger generations were more likely to be encouraged to buy through BNPL, with 45% of Gen Z and 46% of Millennials.
By contrast, only 31% Gen X were encouraged to buy and 12% Baby Boomers.
This could suggest changing attitudes with regards to buying on credit, with a more positive reception among younger consumers.
Of those who said they were more likely to return to the high street to shop following the pandemic, 50% said that BNPL would encourage them to buy, highlighting the importance of offering a broad range of payment options both online and in-store.
People in London were most likely to be encouraged by BNPL (45%), followed by respondents in the North West (41%). Respondents in the East of England were least likely (28%).
“These findings paint a clear picture of a future generation of consumers, much more acquainted with new payment methods than their parents and grandparents,” comments Angus Burrell, SVP Retail, emerchantpay.
“Today’s commerce environment is evolving faster than ever and businesses must keep up. With so much competition online and, as we’ve seen from previous report chapters, speed and efficiency playing such an important role in encouraging people to buy, the payment methods that merchants offer can mean the difference between sale or fail.”Banking