Payment service provider, emerchantpay, has published the fourth and final instalment of its New World, One Market Report, which examines consumer behaviour post-pandemic. The latest chapter 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.
More than a quarter (29 per cent) 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 £20.39B 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.
PayPal was the preferred payment method online as chosen by over a third of UK consumers (34 per cent) – rising to 46 per cent of Gen X respondents and dropping to 24 per cent Gen Z. When asked how people expect to pay online in five years’ time, almost 1 in 6 (15 per cent) of Gen Z and just over 1 in 10 (11 per cent) Millennials thought digital wallets would be their go-to method, with 10 per cent respondents overall. This means that by 2026, digital wallets will account for more than £11billion in online spending. The predicted figures are an increase from 11per cent Gen Z, 5 per cent Millennials and 6 per cent of all respondents listing digital wallets as their preferred method today, demonstrating considerable growth in popularity due over the coming years.
Crypto also saw a rise in popularity with 4 per cent of all age groups expecting to use it as a preferred payment method in five years’ time versus 1per cent today. That could equate to as many as 2.68m people nationally, or £4.4billion 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 per cent today, to 28 per cent in five years’ time.
Buy Now Pay Later (BNPL) was another popular payment method, with 37 per cent saying the service encouraged them to buy. 38 per cent were neither encouraged or discouraged, and 19 per cent were discouraged to buy.
Younger generations were more likely to be encouraged to buy through BNPL, with 45 per cent of Gen Z and 46 per cent of Millennials. By contrast, only 31 per cent Gen X were encouraged to buy and 12 per cent 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 per cent 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 per cent), followed by respondents in the North West (41 per cent). Respondents in the East of England were least likely (28 per cent).
Angus Burrell, SVP Retail, emerchantpay, said: “These findings paint a clear picture of a future generation of consumers, much more acquainted with new payment methods than their parents and grandparents. 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.”
Burrell added: “The pandemic has enacted a real shift in public attitudes to technology spanning all sectors, and a number of retailers have struggled to get to grips with it. We wanted to help by arming them with insights to inform their payments strategies, with an additional chapter dedicated to payments technology.”
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