While Gen Z is a generation that stands out for a commitment to the climate, this cohort is also notably price-sensitive and keen to follow fashion trends. Research shows that younger consumers will pay a price premium for sustainability, but there is a clear limit to how much extra they are willing to spend.
One payment innovation that has gained traction in recent years and might help with this problem is buy-now, pay-later. The latest Vogue Business Index shows that most luxury fashion brands now offer this as a checkout option. It could be an attractive option for younger consumers put off by the high up-front price of environmentally-friendly items, allowing them to break payments down into smaller instalments. Li says this is particularly relevant given the economic conditions expected in 2024 and persistently lower-than-average levels of consumer confidence. “It reduces another friction for consumers to decide to purchase sustainably,” she says.
Chinese payment platform Alipay demonstrated another way to infuse payments with sustainable values through its Ant Forest campaign. Users were invited to log whether they had made environmentally friendly lifestyle choices within their day-to-day spending, such as taking public transport to work or rejecting disposable utensils when ordering food online.
Each action taken helped the user grow a digital tree, which, when fully grown, would lead to a real tree being planted or alternative conservation steps being taken by the company. Ant Forest and its NGO partners have planted around 122 million trees in China through the campaign, which won the UN Champions of the Earth award in 2019.
Digital wallets like Alipay also offer the added benefits of encouraging paperless receipts, reducing plastic usage and creating a data trail that can help brands understand their consumers more deeply. Just like Alipay, these wallets could be used to assess the sustainable buying behaviours that consumers are open to and even offer rewards to those who choose rental, resale or repair.
As Petra Gillis, EMEA solutions lead, consumer goods and retail at J.P. Morgan Payments, explains: “If in addition to [a] seamless carbon-friendly payment experience, you equally feel good about the sustainability choices you have made, it will likely encourage you to come back making more sustainable purchases aligned with your eco-conscious values.”
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