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- US Payment Preferences Consumer Report 2024
While credit cards are selected as the #1 payment preference by 39% of credit card owners, they are ranked as a 2nd or 3rd choice by just 29% of cardholders. Proponents of credit cards continue to use them for a wider range of purchases, from small in-person transactions to large, online purchases. However, the polarizing nature of credit cards causes some segments to bury credit cards deep in their wallets and opt for debit alternatives that prevent plunges into debt.
Inflation enhanced consumer dependence on their card products, accelerating potential concerns surrounding debt due to the less tangible and more digital nature of transactions. As cash payments deteriorate, consumers will need to maintain vigilance and adopt digital budgeting practices to keep a sense of control over the ever-broadening payments landscape.
The rise of credit card payments in everyday purchase categories provides an opportunity for banks and issuers to customize products that reward customers for their unique spend profiles. However, the dissociation between product and payment that may occur as credit cards and debit cards shift into a new identity as primarily digital products carries the risk of more easily switching between similar products and constant evaluation from customers on whether their chosen payment is the ideal option.
This report looks at the following areas:
- Consumer payment preferences
- Adoption rates for digital wallets and P2P payment apps
- Most common payments by purchase type
- Attitudes toward digital wallets
- Attitudes toward buy now, pay later (BNPL) services
- Attitudes toward payments
Credit cards top the hierarchy of payment preferences as consumers prioritize convenience and explore digital payments with enhanced enthusiasm.
Patrick Rahlfs, Principal Analyst – Financial Services
Market Definitions
For the purposes of this Report, Mintel has used the following definitions:
This Report examines consumer payment behaviors and attitudes toward a variety of payment types, including payment preferences for general and specific purchase categories, and mobile payment system use.
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Executive Summary
- What you need to know
- Credit cards are popular, yet polarizing
- Graph 1: #1 ranked payment preference among credit and debit card owners, 2024
- Debit cards maintained a niche among young consumers and as a backup
- Graph 2: payment preference for the majority of purchases, 2024
- Apple Pay surges among young, financially healthy consumers
- Graph 3: digital payment system usage, by financial situation, 2024
- Cash is necessary, just not on an everyday basis
- Graph 4: attitudes toward cash, by generation, 2024
- Market predictions
- Opportunities
- Incentivize digital wallet usage in-store
- Combine flexibility with certainty
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Market Dynamics
- Market context
- Market drivers
- Annual inflation sits at 2.9% as of July, the lowest it has been since March 2021
- Graph 5: headline CPI and shelter CPI, 2021-24
- Consumer sentiment remains down, but is expected to rebound soon
- Graph 6: consumer sentiment index, 2022-24
- Market landscape
- Credit cards have displaced cash over the past decade
- Graph 7: share of payment instrument use, by type, 2016-23
- Credit card payments have the highest average value
- Graph 8: average transaction value of payment types, by year, 2016-23
- Even smaller payments are now primary done through cards
- Graph 9: average number of in-person payments less than $25 per month, by year, 2016-23
- Online and remote payments reached a new high
- Graph 10: percent of purchases and P2P payments made in-person vs online or remotely, 2024
- Credit card accounts and balances rise at a more moderate pace
- Graph 11: credit card accounts and debt balance, by year, 2016-24
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Consumer Insights
- Consumer fast facts
- Preferred payment methods
- Credit cards are the preferred choice for most purchases
- Graph 12: #1 ranked payment preference among credit and debit card owners, 2024
- Cash preference doubles among non-credit card owners
- Graph 13: #1 ranked payment preference, by credit card ownership, 2024
- Debit and cash are popular secondary choices
- Graph 14: payment preference for the majority of purchases, 2024
- Gen Z prefers debit cards and incorporate digital wallets
- Graph 15: top-ranked payment preference, by generation, 2024
- Black and Hispanic consumers are more likely to prefer cash equivalents
- Graph 16: top-three ranked payment preferences, by race, 2024
- Hispanic consumers are the top users of digital wallets and P2P apps
- Graph 17: top-three ranked payment preferences, by race, 2024
- Financially healthy consumers reap credit card rewards
- Graph 18: top-ranked payment preference, by financial situation, 2024
- Digital payment method usage
- While PayPal remains #1, Cash App separates itself from the pack
- Graph 19: digital payment usage in the past year, 2024
- Venmo usage stagnates, while Apple Cash takes a leap
- Graph 20: digital payment usage in the past year, by year, 2019-24
- Mobile payments drive further digital wallet usage
- Graph 21: digital payment usage in the past year, by year, 2019-24
- Zelle adoption is strong among women and multicultural groups
- Graph 22: Zelle usage, by demographics, 2024
- Gen X and younger have achieved relative parity in P2P usage
- Graph 23: digital payment usage in the past year, by generation, 2024
- Nearly 60% of Black consumers used Cash App in the past year
- Graph 24: digital payment usage in the past year, by race, 2024
- Apple digital wallets are adopted by Gen Z
- Graph 25: digital payment usage in the past year, by generation, 2024
- Apple's digital wallet services are used by financially healthy segments
- Graph 26: digital payment system usage, by financial situation, 2024
- Parents are prolific digital wallet and payment app users
- Graph 27: repertoire analysis of number of digital payment systems used, by parental status, 2024
- Payment preference by purchase type
- Credit cards are preferred across most purchase categories
- Women drive in-store debit card usage
- Graph 28: usual payment choice for in-store purchases, by gender, 2024
- Credit cards face competition for mobile purchases
- Graph 29: typical payment for online purchases from a mobile device, by generation, 2024
- Higher-income consumers charge large purchases, while lower-income consumers manage balances
- Graph 30: typical payment for large purchases, 2024
- Attitudes toward digital wallets
- Consumers find digital wallets secure and useful, but not always convenient
- Consumers find digital wallets secure and useful, but not always useful (cont.)
- Young high earners embrace digital wallets, often using them for purchases
- Graph 31: attitudes toward digital wallets, by household income, 2024
- Young consumers grapple with more options within digital wallets
- Graph 32: attitudes toward multiple digital wallets, by generation, 2024
- Buy now, pay later
- Consumers do not have strong preferences within the BNPL space
- Gen Z shows skepticism toward BNPL language
- Graph 33: usage of BNPL/financing for small purchases, 2023-24
- The $75K-100K household income group is a BNPL sweet spot
- Graph 34: attitudes toward BPNL, by household income, 2024
- The $75K-100K household income group is a BNPL sweet spot
- Parents find more value in BNPL's flexibility
- Graph 35: attitudes toward BNPL, by parental status, 2024
- Attitudes toward payments
- Inflation continues to impact card usage
- Graph 36: increases in debit and credit card usage in the past year, by age, 2024
- The necessity of cash is more based on principle than through everyday necessity
- Graph 37: attitudes toward cash, by generation, 2024
- Digital wallet users grow more comfortable with cash alternatives
- Men are more comfortable storing payment information online
- Graph 38: I am comfortable saving payment information (eg credit card number) online in order to make purchases easier, 2024
- Crypto interest surged year-over-year
- Graph 39: interest in using crypto for purchases, by year, 2021-24
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Innovation and Marketing strategies
- Launch activity and innovation
- Amazon launches the Amazon One app
- Cash App eyes banking expansion
- Marketing and advertising
- Cash App's top-spend campaign warns users about scams
- Venmo's top ad of 2024 promotes Teen Account
- PayPal reminds customers of a credit alternative
- Discover encourages digital wallet adoption
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Appendix
- Market definition
- Consumer research questions
- Consumer research methodology
- Generations
- Abbreviations and terms
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