How Consumers Under 40 Are Driving Radical Transformations in Payments
By Sean Gelles, Senior Director, Payments Intelligence at J.D. Power
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Executive Summary
- The payments preferences of younger consumers are diverging from those of previous generations, towards digital wallets, biometric checkout, BNPL and cryptocurrency — and away from traditional credit cards.
- In Q4 of 2024, BNPL usage among consumers under 40 exceeded credit card usage for the first time. In the first half of 2025, 50% of younger consumers say they used BNPL in the previous three months — up six points from just a year ago.
- These changes reflect younger consumers’ priorities: speed, convenience and control, particularly the ability to monitor and manage spending activity. They are also more likely to engage with card lock/unlock features, alerts, and profile management.
It may be tempting to view change in financial services as slow-moving or limited in scope — even following the introduction of new technologies or processes.
In some cases, that perception holds true. But in others, change can be rapid and far-reaching, often occurring without widespread awareness. Such a transformation is underway in the payments space, with younger consumers driving a generational shift in how payments are made that is already reshaping every stage of the value chain. The implications are significant.
Consider this: Consumers in the United States under the age of 40 are nearly as likely to have used cryptocurrency to make a purchase in the previous three months as they are to have written a check. According to three years of J.D. Power data, these younger consumers are consistently outpacing the broader market in their use of newer and innovative payment methods — biometric checkout, digital wallets, buy now, pay later (BNPL), and cryptocurrency. They’re also showing greater usage of pay-by-bank and debit cards.
A Shift in the Tides
At the same time, they’re turning away from traditional credit cards — arguably the most popular payment method since the check — even for purchases that typically deliver the highest rewards. And these aren’t just life-stage behaviors; they reflect durable, generational preferences that persist even when controlling for income, creditworthiness, and education.
Some of the most dramatic generational differences appear in the usage of digital wallets. In the first half of 2025, 70% of consumers under age 40 said they used digital wallets to make purchases in the previous three months, compared to just 41% of consumers 40 and older. Younger consumers also report much stronger affinity towards this technology: 73% say they have a somewhat or very favorable impression of digital wallets, compared to just 50% of older customers. Usage and favorability among younger consumers have been growing steadily since early 2023 — and that growth shows no signs of slowing.
Digital wallets are also amplifying the appeal of younger consumers’ favorite payment method: debit cards. In the past three months, 82% of consumers under 40 used a debit card to make a purchase, and 78% view debit favorably. Among consumers 40 and older, those numbers fall to 68% and 67%, respectively. Half of younger consumers (50%) used debit cards via a digital wallet, versus just 28% of older consumers. And 52% of younger consumers use debit cards as the primary funding source for their digital wallet purchases — compared to 41% of older consumers.
This growing link between debit and digital wallets reflects younger consumers’ priorities: speed, convenience and control. Speed of transaction is their top reason for using debit, followed closely by the ability to monitor and manage spending activity. They’re also more likely to engage with digital tools like card lock/unlock features, alerts, and profile management. Notably, in the data from the 2025 study which covers all of 2024, we saw overall satisfaction drop nearly twice as much for younger consumers — compared to those 40 and older — when their debit cards cannot be provisioned to a digital wallet through a mobile app or online.
Dig deeper:
- Consumers Diversify Borrowing as Credit Cards, Personal Loans and Home Equity Credit All Grow
- Inside Synchrony’s Home Brewed, Six-Second Credit Approval Process
- Margins, Loyalty and Risk: The New Credit Card Issuer’s Playbook
Credit Cards Are Still Alive..But Barely
Younger customers still use credit cards — 55% say they made a purchase with one in the past three months — but their usage is waning. In Q4 of 2024, during peak holiday shopping, BNPL usage among consumers under age 40 surpassed credit card usage for the first time since we began tracking preferences. In the first half of 2025, 50% of younger consumers say they used BNPL in the previous three months — up six points from a year ago. That continues a pattern we’ve seen over the past two years: usage rising throughout the year, spiking in Q4, then leveling off at a higher baseline. Even more striking: this trend is evident among both younger and older consumers. If it continues, it could heighten competition and intensify pressure on traditional players in the payments space.
Favorability for BNPL is also stronger among younger consumers: 35% have a somewhat or very favorable impression, compared to just 26% of those 40 and older. Still, credit cards retain a slight edge in favorability. Interestingly, the top reason consumers under 40 say they use credit cards is to build or maintain their credit scores — an important signal for issuers, especially now that FICO has begun including BNPL loans in its scoring model. Meanwhile, BNPL providers have a clear opportunity to grow their market share by improving trust, brand perception, and overall favorability.
It’s not just about credit vs. BNPL. Newer payment methods — biometric checkout, cryptocurrency, and pay by bank — are also gaining traction with younger consumers. While usage of biometrics and crypto remains in the single digits, pay by bank has already reached 16% year-to-date. But barriers persist: younger consumers cite security concerns for biometrics, volatility for crypto, and usability challenges across the board. Digital wallet compatibility — currently in development at several firms — could remove at least one of these obstacles.
The payment preferences of consumers under 40 are not just symptoms of life stages. Instead, they’re early indicators of where the entire consumer payments ecosystem is heading. As these consumers advance in age and influence, they are reshaping expectations of speed, convenience, security, personalization and control. Financial institutions and fintech firms that align with these priorities — and anticipate future shifts — will be best positioned to compete in the rapidly evolving payments arena.
