Young raid Bank of Mum and Dad and hold all the cards

The days when the Bank of Mum and Dad was mainly used for a leg-up on the property market are now well and truly over, with parents now financing everything from technology and online education to music and entertainment streaming services as young children and young adults boost their spending power.

That is according to a new global study by digital payments company Checkout.com, which uncovers the influence of younger generations, and reveals that children aged 8 to 15 years old – the so-called Generation Alpha – are driving over a quarter (27%) of non-essential household monthly spend.

This rises to nearly a third of monthly spend for digital purchases, as 29% of Millennial parents take responsibility for purchasing digital products each month for their children. This comes as digital products and services make up over a fifth (21%) of the average global non-essential household spend.

Generation Alpha’s purchasing influence is greatest in online educational resources, which nearly half (47%) of parents are buying for their kids, followed by entertainment streaming, purchased by a third (30%) of parents globally.

The study also highlighted several regional trends in parents buying digital goods and services for their children. Over a quarter (28%) of Millennials globally pay for monthly e-gaming services for their children, rising to half (47%) of parents in the UAE. Parental spend on e-gaming is lowest in the US but this is offset by a third (33%) of children in the US making e-gaming purchases independently each month, having been given the money by their parents.

Chinese children benefit most from educational purchases, with 59% of Millennial parents in China buying monthly digital educational resources for children under 12, and over 22% purchasing news media subscriptions for them.

Meanwhile, parents in the UK spend significantly on online education for their children (39%) and are the most likely to continue to purchase monthly online education for their teenagers.

Apart from being the beneficiaries of their parents’ spending, children are also spending independently in the digital economy, with a third (33%) of children in the US (aged 8-15 years) commonly making in-app purchases with their pocket-money, albeit financed by their parents.

In the UK, 71% of children are making their own purchases for non-essential items by the time they are 15, with cards cited as their preferred payment method.

Meanwhile, 75% of 8-year-olds and 92% of 15-year-olds in the UAE make payments themselves, rather than via a grown up.

There is also a growing trend of children over 13 using Buy Now, Pay Later (BNPL) services in the US (7%), UAE (11%), and China (19%). This figure is less than 1% in the UK, however.

In China, 65% of 15-year-olds are taking their purchases into their own hands, with social commerce being their most frequent shopping channel (51%) and QR codes (39%) and digital wallets (39%) their preferred payment methods.

Social commerce is already a major shopping channel in China, with nearly half (46%) of all adult Chinese consumers purchasing via social channels. In the UK (24%), USA (17%) and UAE (23%) this is currently a less common channel among adults, however, children around the world use social media as the go-to source for finding out about deals on products, with very little regional variation (UK: 48%, US: 57%, China: 56%, UAE: 41%).

Furthermore, social commerce is the most common shopping channel, globally, for Gen Zs in all countries, with only just over a third (35%) of Gen Zs regularly shopping in physical stores.

Checkout.com chief marketing officer Rory O’Neill said: “The younger generation is going beyond using social channels for discovery, but actually purchasing through these platforms. We’re seeing this unfold in China, which should always be considered the blueprint for future commerce.

“What’s more, businesses need to pay close attention to customer preferences for payment – across all generations – in order to drive growth and loyalty in this fast-changing and competitive market.”