Are Gen Z choosing retail finance over credit cards?

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Born between the mid-90s and the early 2010s, Gen Z are the new generation of shoppers. And for merchants, they’re the ones to watch – and win over – as their spending power increases.


Due to Gen Z’s tech-savvy reputation, survey findings from Retail Week around predicted spend in 2024 might come as a surprise. 38% of Gen Z told the outlet that they prioritise shopping in stores over online purchases. This puts them second only to Baby Boomers, with 50% of the older generation preferring brick and mortar spend.


Omnichannel retail continues to evolve. The surge in popularity of ‘Click and Collect’ services show that customers enjoy interacting with physical storefronts through digital mediums.


Merchants looking to capitalise on Gen Z’s surprising appetite instore will need to create a customer journey that’s seamless across all platforms – and that includes payments.


Offering multiple payment options at your checkout isn’t really optional anymore if you want to stay competitive. This includes digital wallets such as Google and Apple Pay, debit and credit cards and retail finance.


But which of these does Gen Z prefer?


Is Gen Z comfortable with credit?


According to findings by TransUnion, Gen Z are accessing credit at an earlier stage in their lives than their millennial counterparts. However, this seems driven less by desire and more by necessity as inflation soars. While Gen Z shoppers are making use of credit, there are several factors which are making them shun credit cards as a form of borrowing.


1. Financial caution


75% of Gen Z customers surveyed by TransUnion said their finances were negatively impacted by the pandemic-induced recession. This, coupled with witnessing their parents struggle with finances during the Great Recession, has made many Gen Z buyers more financially conservative about accumulating debt.


2. Alternative payment methods


Gen Z is more comfortable with digital payment methods, such as mobile wallets and payment apps, which offer convenience and immediate transaction tracking, without the need for a credit card.


3. Student loan debt


Many Gen Z customers are already burdened with student loan debt. As such, they’re conscious of adding to an already sizeable loan balance by using credit cards.


4. Financial literacy


With access to vast amounts of information online, Gen Z are arguably more financially literate and aware of the potential risks associated with credit card debt than previous generations.


5. Retail finance options


The increase in flexible payment methods such as Buy Now Pay Later (BNPL) and retail finance options mean Gen Z can spread the cost of purchases (in many cases, interest free), without the need for credit cards.


The last point is especially relevant when it comes to Gen Z attitudes towards credit cards versus other methods of credit. Finder states that retail finance/BNPL options are the most popular form of credit amongst Millennials and Gen Z. In fact, 68% of Gen Z report having used retail finance options at some point.


And it’s not just them. 69% of millennials, 52% of Gen X and 31% of Baby Boomers have all used retail finance and Buy Now Pay Later options to spread the cost of purchases.


Most checkouts include credit cards as a standard method of payment. But if you want to add retail finance options, you’ll need to partner with a finance provider. For help choosing a suitable provider, advice on questions to ask during the onboarding stage as well tips for making your solution a success, visit our practical guides. 


Alternatively, contact our experts to arrange a quick, no-strings demo.




Book a Demo

Please note, a minimum turnover of £2.5M and minimum trading period of 24 months is required to offer DivideBuy finance solutions.

Please note, a minimum turnover of £2.5M and minimum trading of 24 months is required to work with DivideBuy.


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