A new survey of American teen consumer trends suggests that Apple and PayPal are well positioned for strong growth.
According to Piper Sandler's 43rd semi-annual survey of Gen Z, which looked at 7,100 teens in 44 states between February 16 and March 22, Apple Pay (AAPL) was ranked first among payment apps and PayPal (PYPL) first among buy now pay later (BNPL) apps.
Cash was still the top choice for teens, with 89% of respondents saying they used it in the past month compared to 83% the year before.
When it came to teens' preferred payment apps, Apple Pay beat out others like Venmo, Zelle, and Google Pay because 87% of the teens surveyed had an iPhone, the analysts found.
Apple Pay also had the most monthly users of any payment app with a 23% penetration rate while Venmo came in second, Cash App in third, and the PayPal app came in fourth. PayPal bought Venmo in 2013.
For buy now pay later — a service that allows consumers to split payments into installments — PayPal's "Pay in 4" service was most frequently used, followed by Afterpay, which was recently acquired by Block (formerly Square) (SQ). BNPL services had a 34% penetration rate, which was unchanged from last year.
"We think PayPal’s strong ranking with teens for payments (both Venmo and PayPal) and leading spot for buy now pay later (Pay in 4) positions PYPL for future market share gains and payment volume growth," the analysts stated.
PayPal could also catch up to Apple on payments, according to the analysts. Given that Venmo was only ranked a spot behind Apple Pay, they added, "PYPL can leverage its strength with teens" to bring more merchants on the app and move into "social commerce."
While Block, which owns Afterpay, trailed Apple and PayPal, the report stated it was a "key company to watch" based on how it might combine its payments business with BNPL.
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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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