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Gen Z and Digital Payments: Observations from a Student Perspective

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FedMSB

Executive Summary

Generation Z grew up with smartphones and the internet as the default. For many U.S. high school students, paying with a phone, sending money to friends, and checking balances in apps already feel ordinary. This brief organizes first-hand observations from school life and peer conversations into: commonly used payment methods, reasons for preference, and challenges that still get in the way.

Table of Contents

  1. Introduction
  2. Background and Relevance
  3. Methodology
  4. Key Findings
    4.1 Commonly Used Payment Methods
    4.2 Why Gen Z Prefers Digital Payments
    4.3 Challenges and Concerns
  5. Youth Perspective
  6. Conclusion and Implications
  7. Author Note

Introduction

As part of Generation Z, I grew up in a world where digital technology was already the default. From my early years at an international school in Singapore to my current life at Great Neck North High School in New York, smartphones, laptops, and the internet have always been everyday tools.

Because of this, my generation doesn’t see digital payments as futuristic. Paying with a phone or sending money online feels natural. In this brief, I share observations from my peers about how Gen Z students in the U.S. use digital payments, why we prefer certain platforms, and what challenges we encounter. This brief is not a technical or academic study—it reflects a student’s perspective shaped by everyday conversations and real experiences.

Background and Relevance

Over the past decade, digital payments in the U.S. have expanded rapidly. Apple Pay, Google Pay, Venmo, CashApp, and PayPal are now widely used. While older generations often rely on credit cards or cash, many Gen Z students instinctively reach for their phones first.

This matters because today’s teenagers are tomorrow’s consumers. The payment habits we form will influence how financial companies grow and how businesses design services. For fintech firms and banks, listening to Gen Z is no longer optional—it is essential.

Methodology

My observations are drawn from three sources:

  1. Peer conversations about everyday transactions such as lunch payments, online shopping, and splitting bills.
  2. Direct observation of how classmates handle money in group settings.
  3. Informal survey prompts through my project, FedGov.us, asking about preferred payment methods.

Although limited in scale, these inputs capture authentic voices from my high school community.

Key Findings

1) Commonly Used Payment Methods

  • Apple Pay & Google Pay: Most popular, as phones are always with us. A double tap is quicker than pulling out a card.
  • Venmo & CashApp: Essential for splitting costs among friends—pizza, rides, tickets. Venmo’s social feed adds a peer-to-peer connection.
  • Debit & Credit Cards: Still important, especially for online purchases or when parents provide funds.
  • Cash: Rarely used, except at vending machines or stores without mobile payment options.

2) Why Gen Z Prefers Digital Payments

  • Convenience: Phones are always in hand.
  • Speed: Faster than handling cash or waiting for change.
  • Social element: Adding notes or emojis makes money exchange feel more personal.
  • Trust: We grew up with Apple, Google, and PayPal—brands we are comfortable relying on.

3) Challenges and Concerns

  • Security risks: News of scams causes hesitation in linking bank accounts.
  • Parental influence: Some parents prefer traditional banking and set limits on mobile wallets.
  • Acceptance gaps: Not all merchants accept digital payments, so cash is occasionally necessary.

Youth Perspective

To me and my peers, digital payments already feel second nature. At lunch, we Venmo each other without hesitation. At local stores, Apple Pay is the norm, while using cash feels outdated.

When I lived in Singapore, students relied more on debit cards and cash. After moving to the U.S. in ninth grade, I noticed how quickly Gen Z here embraced mobile payments. This shows how payment cultures differ across countries, but also how our generation consistently looks for the simplest, fastest option.

Conclusion and Implications

For Gen Z, digital payments are not just financial tools—they are part of our lifestyle. We expect transactions to be seamless, quick, and even social. What older generations may still call “new technology” is, for us, already ordinary.

From these experiences, fintech companies and banks can take away three lessons:

  1. Keep it simple: Apps must be easy to use.
  2. Make it social: Payments also carry a human connection.
  3. Build trust: Security and transparency matter most to young users.

As a student interested in business, technology, and design, I see real opportunity for my generation to shape the future of financial services. Companies that engage Gen Z today will be the ones leading tomorrow.

Author Note

This research brief was written by Zibo Mi, Student Research Intern in the Summer Youth Program at the Federal Money Services Business Association (FedMSB). It was published on the FedMSB official website in September 2025 as part of his internship contributions.