In a world where convenience is king and consumer expectations are evolving faster than ever, the proliferation of new payment methods is driving rapid transformation across the payment industry.
From the convenience of digital wallets to the rewards offered by credit cards and the simplicity of debit cards, today’s payment landscape is a dynamic blend of innovation and practicality. But beyond the obvious choices lies a deeper story of how our preferences shape the ways we transact and interact with businesses.
Year-end data from Pymnts Intelligence highlights the important roles that choice, confidence, and convenience play for both buyers and sellers. The payment preferences of today’s shoppers are more than just numbers - they reveal insights into behavior, generational habits, and even the future of payments.
In this blog, we’ll delve into consumer payment preferences for 2025, breaking down the methods dominating eCommerce and point-of-sale transactions. We’ll explore how payment preferences vary by purchase type and generation, and, most importantly, we’ll uncover why understanding these trends is essential for payment industry leaders - from retailers and e-tailers to merchant acquirers, payment processors, and card issuers - to innovate and build robust payment testing environments that keep them ahead of the curve.
Preferred Payment Options in 2025
2025 marks a significant shift in the payment landscape, with digital wallets, credit cards, and debit cards leading the way. Data from Payments and Commerce Market Intelligence (PCMI) reveals the following consumer payment preferences:
eCommerce
- Digital Wallets: 37% of transactions
- Credit Cards: 33% of transactions
- Debit Cards: 18% of transactions
- Account-to-Account (A2A): 5% of transactions
- Buy Now, Pay Later (BNPL): 5% of transactions
- Prepaid Cards: 1% of transactions
- Cash on Delivery: 1% of transactions
Point of Sale (POS)
- Credit Cards: 42% of transactions
- Debit Cards: 28% of transactions
- Digital Wallets: 15% of transactions
- Cash: 11% of transactions
- Prepaid Cards: 3% of transactions
- POS Financing: 1% of transactions
PCMI also forecasts that by 2026, digital wallets will surpass cards in eCommerce, holding a 41% market share compared to 39% for cards. Notably, in North America, popular digital wallets like Apple Pay and Google Pay often serve as virtual facsimiles of credit and debit cards, blending traditional and modern payment methods.
Payment Options by Purchase Type
Payment preferences often vary based on the type of purchase. Figures from Pyments Intelligence's “How People Pay” eBook reveal:
- Groceries: Consumers are 67% more likely to use debit cards than credit cards for grocery purchases, driven by convenience and real-time expense tracking. About 39% of shoppers prioritize the most convenient payment method when grocery shopping.
- Travel Services: Credit cards dominate the travel industry, with 40% of consumers recently using them for travel-related purchases. Credit cards are also the go-to for earning rewards and leveraging travel-specific perks.
- Retail Purchases: Shoppers are 2.9 times more likely to have shopped in-store rather than online for their last retail purchase. While shopping in the physical world, consumers frequently choose credit cards for rewards or debit cards for convenience.
- Digital Wallets: Tech-savvy consumers are 2.4 times more likely to use a digital wallet for travel purchases than for groceries. The appeal lies in their seamless functionality and increasing acceptance across industries.
Meanwhile, a separate report from Pyments Intelligence on Buy Now Pay Later (BNPL) payments found that, as of October 2024, 56% of consumers say that they have used a BNPL service in the past year.
This payment option is particularly popular among financially struggling high earners, with 75% utilizing BNPL plans to manage expenses. Interestingly, industry data shows that consumers tend to spend 25% more when using general-purpose credit card installment plans compared to specialized BNPL services.
Payment Options by Generation
Understanding payment preferences across generations offers a unique lens into consumer behavior and helps retail businesses tailor their strategies effectively. Each generation’s payment habits reflect their financial priorities, comfort with technology, and lifestyle.
Generation Z - Cash, Debit Cards, and Mobile Payments
Generation Z (1997-2012) is redefining payment behavior with a blend of traditional and digital methods. While they are known as digital natives, their preference for debit cards stands out - 52% of Gen Zers opt for debit cards for everyday purchases, according to SurveyMonkey. The convenience of real-time balance updates and the avoidance of debt align well with their cautious financial habits.
Interestingly, 37% of Gen Z consumers prefer to use cash for in-person purchases. This reliance on cash may seem surprising in a digital age but can be attributed to their desire for tangible spending control and the anonymity it offers. Mobile payment platforms also resonate strongly with this group, as their comfort with technology drives them to adopt solutions like Apple Pay, Google Pay, and other digital wallets.
Moreover, Gen Zers are early adopters of Buy Now, Pay Later services, using them primarily for smaller purchases such as clothing, groceries, and dining out. This reflects their preference for flexibility and manageable installment payments over traditional credit card debt.
Millennials - Credit Cards and Mobile Wallets
Millennials (1981-1996) have been at the forefront of digital payment adoption while still holding onto traditional financial tools like credit cards.
About 65% of millennials have at least one credit card, showcasing their affinity for rewards programs, travel perks, and cashback incentives. For this generation, credit cards are not just a payment method but a financial tool for leveraging value.
Mobile wallets and peer-to-peer payment apps are particularly popular among millennials. Approximately 70% of this generation have PayPal accounts, and many frequently use Venmo or Cash App for splitting bills and making quick payments. This trend underscores their need for seamless, on-the-go payment solutions that integrate easily into their technology-driven lifestyles.
Millennials are also key drivers of mobile wallet adoption for eCommerce and in-store purchases. Their inclination to link loyalty programs and credit cards to digital wallets highlights their desire for streamlined experiences that reward their spending habits.
Generation X - Credit Cards
Generation X (1965-1980) strikes a balance between traditional and modern payment methods. Credit cards are a staple for this generation, with 30% preferring them for dining out, 27% for groceries, and 29% for in-store shopping, as reported by FIS Global. Their consistent use of credit cards is driven by the convenience and rewards associated with these payment methods.
While they may not be as quick to adopt new technology as millennials or Gen Z, Gen Xers are gradually embracing mobile wallets. About 36% of them use mobile payment solutions, and 22% of those users link their loyalty credit cards to these platforms to maximize reward points. This shows that Gen X values practical financial benefits while slowly adapting to digital trends.
Baby Boomers - Credit Cards and Traditional Payment Methods
Baby Boomers (1946-1964) remain loyal to the payment methods they’ve trusted for decades. Credit cards are their go-to choice, reflecting long-standing habits and a high level of trust in this payment method. Many Boomers use credit cards for large purchases and to take advantage of rewards programs, although their adoption of newer payment technologies lags behind younger generations.
Despite this, Baby Boomers are not entirely disconnected from digital trends. According to the American Bankers Association, a significant 76% of Boomers regularly use Internet and mobile banking services, demonstrating their willingness to engage with online financial tools. However, their overall preference leans heavily toward traditional methods, such as cash and checks, especially for in-person transactions.
Why This Data Highlights the Importance of Robust Payment Testing Ecosystems
The evolving payment landscape underscores the critical need for robust payment testing tools. As consumer expectations rise and digital transactions dominate, payment industry players must invest in modern testing solutions to remain competitive.
An efficient payment testing operation correlates directly with profitable growth. Forward-thinking financial institutions, issuers, acquirers, and payment processors that automate, integrate, and optimize their payment testing capabilities are better positioned to satisfy consumer demands and achieve operational excellence.
Testing ensures compliance, reduces downtime, and accelerates the time-to-market for innovative payment solutions.
For more than 30 years, Paragon Application Systems has supported the payment industry with advanced testing solutions. By helping organizations maintain compliance, reliability, and efficiency, Paragon enables payment systems to meet the challenges of today’s fast-paced, ever-changing environment.
Interested in enhancing your payment testing capabilities to help ensure that your organization can effectively deliver the payment choice, confidence, and convenience that your customers demand? Request a consultation with Paragon today to discover how our solutions can empower your organization to thrive in the dynamic payments ecosystem.
