Mastercard (NYSE: MA) noted that today’s consumers are at the forefront of embracing technologies that offer streamlined and intuitive experiences.
Gen Z, the generation spanning teenagers to those in their mid-twenties, is said to be leading the charge.
Instead of juggling between different cards and payment methods, they are looking for a digital solution “to manage their payments today and plan for tomorrow.”
They want their financial life at their fingertips and “a simple way of accessing multiple funding options.”
To meet these needs, Mastercard is launching Mastercard One Credential, a single “digitally connected credential with multiple ways to pay.”
With One Credential, consumers will be able to “choose the payment option (which may include debit, installments, prepaid or credit) that’s best for them, all through a digital experience.”
Jorn Lambert, chief product officer, Mastercard said:
“Today’s consumers expect to be in the driver’s seat. That’s what sparked One Credential. It gives people an innovative way to pay that’s truly personalized to them. While Gen Z may be leading the way, the desire for personalization spans generations.”
One Credential reportedly has key customers and partners committing to help bring the solution to consumers:
- Bendigo and Adelaide Bank group that includes Bendigo Bank, Australia’s bank and Up, Australia’s digital bank.
- Episode Six, a global provider of enterprise-grade payment processing and ledger infrastructure.
- Galileo Financial Technologies, a financial technology company owned by SoFi Technologies, Inc.
i2c, Inc., a leading provider of banking and payments technology. - Lithic, a financial technology platform known for powering growth businesses with bespoke card solutions and seamless money movement.
- Marqeta, the global modern card issuing platform that enables embedded finance solutions for the world’s innovators.
- Wio Bank, One Credential is currently live in the UAE with Wio Bank, a leading digital banking platform.
Compared to previous generations, Gen Z’s payment preferences are distinct in key ways:
- Born as digital natives, Gen Z’s payment appetite is largely digital. According to Mastercard’s latest research, nearly half1 of Gen Z consumers prefer using new and innovative methods of payment, and 65% want to manage everything in one place online.
- Despite seeing themselves as financially cautious, Gen Zers tend to spend more than save and are more mindful of their purchases, seeking personalized solutions. Compared to other generations globally, personalization is 1.31 times more important to Gen Z consumers when choosing a payment method.
- Gen Z consumers aspire to build wealth and actively seek out financial education online. In the US, Gen Zers believe they need financial assets totaling more than $9 million, almost double that of Gen X’s goal. To meet their goals, 73% of teens surveyed say they want more personal finance education and the majority have received advice from social media.
Taken together, these insights show a generation that “wants their financial life at their fingertips and is eager to embrace innovative tools as they plan for their futures.”
Despite Gen Z’s aspirations and preference for digital wallets, they have the lowest average credit score “of all generations in the US, largely a function of thinner credit files and a reluctance to use traditional forms of borrowing.”
Just half of Gen Z consumers currently “use credit, the lowest credit usage among all generations.”
Accessing credit responsibly helps consumers “build a positive credit history, which is crucial for future milestones such as renting an apartment, buying a car, or getting a mortgage.”
Nearly 70% of Gen Zers are actively trying to “increase their credit score, but more than half don’t know where to start.”
Gen Z needs new digital tools that offer “a path to credit worthiness and financial health, while empowering them with choice and control along the way.”
Structured credit, such as installments, gives consumers “another choice in how they pay, and is especially appealing to younger consumers finding a path to credit worthiness.”
By providing structured credit alongside debit, Gen Z consumers “can better manage and control their finances based on their needs.”
For issuing banks, One Credential provides an offering that may be appealing to younger consumers who “seek digital, personalized payment experiences and are planning their financial futures.”
Mastercard also said that it now plans to roll out One Credential for small businesses, empowering them with “choice and control over how they pay.”
One Credential is designed so that consumers and small businesses using it can access funding options and set payment preferences “around transaction type and time – all with a single, digitally connected credential.”