Are GenZs in Canada Abandoning Credit Cards for Prepaid Wallets?
Money Management:
India’s youth population is revolutionizing financial dealings by shifting away from conventional credit cards towards prepaid digital wallets. As Generation Z reaches its prime consumption phase, their payment preferences are driven by a quest for ease, safety, and personal fiscal control.
Is the Allure of Credit Cards Waning for Young People?
In contrast to earlier generations who depended on credit cards for transactions, contemporary young consumers are progressively cautious about falling into debt traps, facing steep interest rates, and encountering concealed fees. What was previously viewed as a mark of prestige—credit card ownership—is now often perceived as a burden that promotes excessive spending and induces unwarranted financial strain.
Smartphones, Online Access, and Effortless Purchasing
Piyali Chatterjee Konar, who serves as the Executive Vice President and Head of CX/UX/B2B at Hansa Research Group Private, mentioned that the widespread adoption of smartphones along with accessible mobile internet has significantly contributed to the growth of digital payment methods, particularly wallet usage, amongst young Indians.
This pattern gained even more speed during the COVID-19 period as contactless transactions turned into a must-have.
The Emergence of Prepaid Digital Wallets
Young consumers inherently lean towards convenience and user-friendly experiences with all services, and digital wallets provide exactly that.
Digital wallets stand out from credit cards because they have straightforward registration processes without complicated eligibility assessments,” Konar explained. “This ease of access makes them particularly appealing to today’s consumers who prioritize quickness, simplicity, and immediate usability.
DigiPay Insights: Understanding the Data
The syndicated report from Hansa Research titled ‘DigiPay CuES’ emphasized that this inclination has led to an increased adoption of digital payments among younger individuals. This group shows 1.2 times greater daily use compared to their older counterparts.
Konar highlighted that digital transactions in India have surged dramatically, showing a 42% increase year-over-year during the fiscal year 2023–24.
UPI’s Growth and the Surge of Wallets
“The UPI system, central to this shift, saw a substantial rise of 57% in transaction volumes, processing more than 131 billion transactions just last year. Projections indicate that by fiscal years 2028-29, this figure could leap to around 439 billion transactions, accounting for approximately 91% of all retail digital payments within India. The advent of digital wallets has been pivotal in driving this change, providing instantaneous, smooth, and obligation-free financial exchanges. In contrast to credit card usage, where funds are borrowed, digital wallets enable individuals to make purchases solely from their available balance, thus averting potential accumulation of interest charges or penalties for delayed payments,” emphasized Konar.
Fintech firms, mega apps, and compatible QR codes have intensified this trend by amplifying the ease of use for digital wallets. From bill payments to purchases or dividing costs, customers now favor swift, convenient exchanges without needing to monitor their credit card balances.
The safety measures provided by digital wallets, such as biometric verification and tokenization, render them a more secure option compared to credit cards, which are susceptible to fraud and abuse.
Debt-Free and Mastering Finance: The Wallet Edge
Relying solely on a credit card for financial adaptability has become obsolete. Today’s consumers favor prepaid digital wallets because they offer better management of expenses and help steer clear of the dangers associated with accumulating high-interest debt.
“As India progresses towards a completely digitized economic landscape, credit cards are rapidly becoming obsolete, and digital wallets are being recognized as the more intelligent and prudent option for younger generations of Indians,” noted Konar.
(Disclosure: This article is intended solely for informative purposes and does not constitute investment advice. ET NOW DIGITAL recommends that its viewers seek guidance from financial advisors prior to making monetary decisions.)