Generational relativity & payments preferences

When it comes to innovation and implementing change, credit unions have many things to consider, including cost to implement, deployment strategy, security and compliance, and employee and member onboarding—among other things.

For many organizations, generational preferences are the driving force behind improvements and innovation, propelling credit unions and their partners to remain focused on staying one step ahead of technology and consumer trends.

One thing that the data does agree on is that all consumers, regardless of age, are starting to migrate from traditional payment methods, opting for digital payments. For financial institutions competing with fintech disrupters, inertia is not an option—they must innovate to meet the payment preferences across the generational divide. In this article, we’ll take a look at recent industry trends and evaluate the payment preferences of the different generations to help your credit union develop the best strategy for improving every member’s experience. 

Baby Boomers (1944-1964)

Born in droves in the years after World War II, baby boomers are currently in their mid-fifties to mid-seventies. Although it is a common industry misconception that the younger generations are forcing financial institutions and payment acceptance providers to innovate, provide cashless only options, and remove all friction from the buying process, baby boomers are actually just as put-off by inconvenience when it comes to making payments as their millennial and Gen X counterparts. 

Debit has evolved from being a youth-focused payment method to being the payment option of choice for 171 million U.S. consumers,1 becoming the number one most-used payment method across nearly all age segments. In fact, 77% of baby boomers use debit and credit cards.2 

For credit unions, options are key when it comes to debit card payments. Giving all of your account holders, regardless of generational affiliation, options that include different reward programs, fee structures, and cashback options could be the difference between deeper wallet share—or a one-and-done borrower.

Gen X (1965-1980)

Born between 1965 and 1979, Gen Xers lived through the end of the Cold War and Watergate. Gen Xers have the highest total debt of all age groups, and only 42% of them pay off their credit card balances each month.3

Overall household credit card debt has steadily risen over the last five years, sitting at $1.3 trillion more (in nominal terms) than the previous peak in 3Q 2008.4 So, while credit cards cannot be used on loan payments, in most cases, credit cards are very much a part of the daily purchasing habits of many U.S. consumers.

Millennials (1980-1995)

Everyone knows that millennials are digital natives, but simply having an online banking site doesn’t mean you’re providing all the convenience millennials seek. You have to optimize your website and online banking portal for how millennials use them.

Although millennials are thought of as one group, there are actually two distinct subgroups that make up this demographic:

  • Older Millennials (1980-1988)
  • Younger Millennials (1989-1995) 

Having grown up with the internet, both older and younger millennial consumers expect easy access to information—when they want it, where they want it, and in whatever channel they choose. They hold a high comfort level when using mobile devices as part of a multichannel experience and are using mobile to connect the online and offline worlds. 

Although the emerging omni-channel consumer is typically a younger person, there is a growing amount of overlap for this preference, even among baby boomers and members of Gen X. There are pockets of older consumers—primarily technology-savvy segments—that share the enthusiasm for mobile payments but also have strong cross-channel behaviors. 

In other words, just because mobile is a preferred method of payment for millennial consumers, convenience is still at the top of everyone’s list, and it’s important not to lose sight of other payment channels like online, IVR (Interactive Voice Response), cash (ex: MoneyGram), and customer service representative (CSR)-assisted.

With more options than ever, today’s consumers want their payments experience to be fast, easy, and secure, with the latest and greatest technology. Providing a frictionless and diverse payment experience that is effective across the generational divide can help credit unions thrive in a competitive financial services landscape. The path forward will require a thorough understanding of your customer base, generational preferences, and trending payment technology.

To learn more about how payment preferences differ across generations, download our ebook, Equal and Opposite Reactions: Payment Preferences Across the Generational Divide.


1 Simmons National Consumer Study, Fall, 2017.

Ali Masoudi

Ali Masoudi

A pragmatic, Ivy League educated and a recipient of Feigenbaum Medal presented by American Society for Quality (ASQ), Ali is an experienced product manager with 10+ years proven track record ... Web: Details