Debit Strengthens Consumer Loyalty Among Gen Z and Other Key Demographics

As the use of debit cards continues to rise, the industry is particularly attentive to Gen Z consumers, who show a strong preference for debit transactions. Approximately half of Gen Z, making up a quarter of the U.S. population, use debit for grocery shopping, while over 40% use it for everyday purchases at petrol stations and small businesses. As this demographic increasingly enters the workforce, they are becoming a significant customer base.

Debit cards are now a top-of-wallet choice for many U.S. consumers, both in physical stores and online. 55% of consumers used debit more frequently in the past year. The trend makes sense as consumers prefer to manage their spending with debit cards for everyday purchases.

Digital payments are a major factor in this growth. The vast majority of millennials (91%) and Gen Z (90%) are using digital payments, with a clear preference for debit. Nearly half of shoppers aged 18-24 prefer using debit in digital channels, compared to 35% or less in older age groups. Digital wallets are also boosting debit's popularity, with 66% of consumers setting debit as their default payment method.

The use of digital wallets is increasing, with one in five customers preferring to use their debit or credit card stored in a digital wallet like Apple Pay, Google Pay, or Samsung Pay. As a result, merchants are upgrading their payment systems to support contactless payments, also known as tap and pay, to meet this demand.

Merchants are responding positively to the growing preference for debit. 95% of merchants accept debit cards, with 54% recognising it as an important payment option and 46% identifying it as the most popular method. To cater to Gen Z consumers, merchants need to ensure they accept debit for e-commerce transactions, as these young shoppers expect to use debit for almost any purchase. Accepting a variety of debit options benefits merchants by reducing costs associated with handling cash and checks and providing strong fraud protection.
The pandemic has accelerated the shift towards debit, with consumers preferring debit for purchases under $100, such as groceries and fuel. Nearly half of consumers increased their debit use due to the pandemic. Debit is especially popular for transactions between $25 and $100 and in the growing market for subscription services.

Consumers also seek convenience when obtaining cash, often opting for cash back with debit purchases rather than searching for an ATM. As a result, the preference for debit is expected to persist, with 43% of consumers planning to use debit for everyday purchases in the future. Overall, the growth of debit is poised to continue, with merchants who accept debit in all its forms—both online and in-store—well-positioned to capture repeat business from Gen Z and millennials as their purchasing power increases.