Mastercard’s newly launched One Credential is a one-stop digital solution aimed at giving users greater control over how they pay, including use of prepaid cards, debit cards, credit cards, and buy now pay later (BNPL). Mastercard is aiming to cater to increasing consumer demand for control, flexibility, and choice—particularly among Generation Z users.
GlobalData 2024 Financial Services Consumer Survey
Generation Z consumers, often referred to as “digital natives,” are far more likely to prefer innovative payment solutions than other generations. According to GlobalData’s 2024 Financial Services Consumer Survey, 43% of global consumers aged 18 to 29 prefer to use new and innovative payment experiences, compared with the population average of just 35%. Furthermore, the survey shows that younger consumers are 4pp more likely than average to prioritise a quick and easy payment solution over privacy and security.
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This highlights that younger consumers are more adventurous and less-risk averse than other generations, making embedded finance solutions such as Mastercard’s One Credential more attractive to these users.
Moreover, younger consumers have a lower level of credit card use than other generations, with only 65% of 18–29-year-olds holding at least one credit card, compared with 77% across the rest of the population. This lower penetration rate presents an opportunity for Mastercard to attempt to capture consumers from this demographic by providing a convenient, embedded credit card solution. Younger users are less likely to have a high and stable income, making them more averse to using credit cards due to the difficulty of staying within spending limits and budgeting. The ability to set limits within the One Credential app reduces the risks associated with overspending, potentially increasing the attractiveness of this solution among younger consumers.
GlobalData Buy Now Pay Later Analytics
While not marketed exclusively toward Gen Z consumers, One Credential is Mastercard’s reply to payment solutions such as BNPL offered by competitors such as Klarna and Afterpay, which are most popular among younger users. According to GlobalData’s Buy Now Pay Later Analytics, 2024 was the first year in which the majority of consumers (51%) had used a BNPL tool, highlighting its continued growth across markets and demographics. Furthermore, the amounts borrowed by consumers are increasing year on year, suggesting that trust continues to grow among users.
By offering instalments alongside debit, credit, and prepaid options, Mastercard users will be able to pay for large purchases over a series of payments, increasing the value of transactions processed through the Mastercard network, thus generating higher revenue for the firm through fees. The integrated payment solution allows users to select their preferred payment option based on the value of the purchase they are making, making it easier for users to budget and take advantage of access to credit.
By addressing the needs of Generation Z, Mastercard hopes to capture these consumers at the beginning of their financial journey. While younger consumers are unlikely to need to use all the payment tools offered by One Credential, many will find the use of BNPL and prepaid cards useful for budgeting and money management.
As they mature and their financial needs become more complex, users will be more attracted to debit cards and credit cards, providing higher transaction fees for Mastercard as consumers’ income grows and becomes more stable, facilitating higher spending and higher borrowing. This strategy is likely to increase consumers’ lifetime value for Mastercard, as well as providing material benefits to users in the form of greater control, increased convenience, and seamless access to multiple payment tools.
