The Most Popular Payment Methods in the U.S. [2024 Statistics & Data]

The way we pay has continued to change throughout the 21st century. With the introduction of online payments and digital wallets, the nature of financial transactions has rapidly shifted. In 2024, it’s almost unheard of for businesses to accept cash-only payments, with credit cards, debit cards, and digital payment solutions now the norm. 

In this article, we will dig into the different types of payment methods, as well as the growth of digital wallets. We will also assess if and how the way we pay for items impacts how much we spend.

Popular Payment Methods in the U.S.

According to the 2024 Diary of Consumer Payment Choice by the Federal Reserve Bank of Atlanta, U.S. consumers made most of their payments with debit cards, credit cards, and cash. Although cash still comes out as one of the top payment methods, the report also notes that more than half of payments (62%) were made with payment cards, such as debit, credit, and prepaid. 

The full figures showed: 

• Cash – 16% (of payments)
• Credit – 32%
• Debit – 30%
• Automated Clearing House (ACH) – 13%
• Check – 3%
• Mobile Payment Apps – Less than 1%
• Other – 6%

Of those choosing to stick with cash as a preferred payment option, there was a clear gradient in accordance with total household income. Those bringing in less than $25,000 made 32% of all purchases with cash, while those making more than $150,000 used it for just 10% of all payments. The full figures show:

• Less than $25,000 – 32% (of payments made with cash)
• $25,000 to $49,999 – 25%
• $50,000 to $74,999 – 15%
• $75,000 to $99,999 – 15%
• $100,000 to $149,999 – 11%
• Greater than $150,000 – 10%

Person-to-person (P2P) payments have continued to transition to a more digital landscape, with 2023 marking the seventh time in the last 8 years that a growth in online and remote purchases of this nature were made. 22% of all P2P payments in 2023 were made online, up from 19% in 2022. 

By contrast, credit cards are becoming more popular than ever. In total, credit cards accounted for $3.46 trillion of all U.S. spending in 2023. This represented a marginal rise on the previous year’s total of $3.37 trillion. In total, for the calendar year 2023, the total amount spent across different payment types was: 

• Credit – $3.466 trillion
• Debit – $2.753 trillion 
• Cash – $1.873 trillion 
• Prepaid Cards – $0.234 trillion
• Buy Now, Pay Later (BNPL) – $0.097 trillion

These figures are expected to rise in every area except 1 by the close of 2025, with cash expected to be the only spending method that decreases in value in that time: 

• Credit – $3.834 trillion
• Debit – $3,033 trillion
• Cash – $1.836 trillion
• Prepaid Cards – $0.252 trillion
• Buy Now, Pay Later (BNPL) – $0.125 trillion

The Growth of Digital Wallets

A digital wallet on your smartphone can be used to pay at stores that accept mobile or cashless payments. Digital wallets saw an increase in popularity during the pandemic because they offer a form of contactless payment and remove the need to physically touch a credit card reader.

The shift has been so drastic that more than half of consumers now prefer using their digital wallet over traditional payment methods. As many as 53% of people prefer paying with a digital wallet, compared to 34% who defer to the classic methods. 

Digital wallets are now the most commonly used payment method when online shopping, with 37% of all transactions made this way over the internet. Credit cards came in second with 32% and debit cards with 19%. This figure of 37% is expected to rise to 52% by 2027. 

The pandemic was a primary motivator for the increased adoption of digital wallets. There was a 17.2% increase in the use of digital wallets between 2019 and 2022, with a further 10.2% growth projected from then until 2026. 

This rise in the number of digital wallets in use has led to several big names emerging as providers of this service. PayPal, who was amongst the first to offer digital payment solutions, is most popular with U.S. adults. 71% of those 18 and older use this form of wallet. The most popular are: 

• Paypal – 71% (of all U.S. adults)
• Cash App – 44%
• Venmo – 39%
• Google Pay – 36%
• Apple Pay – 31%

This digital approach to payments is reflective of the gradual shift towards a cashless society. It’s estimated that by 2025, 51.6% of American consumers will no longer use cash as a means of payment. That would see a continued growth in the number of people stopping using cash – which has risen from 24% in 2015 to a projected 48% in 2024. 

Those aged 55 and above are the largest demographic to still use cash regularly. This age group makes 23% of their payments in cash, compared to just 12% of those aged 23 to 34. The total figures showed: 

• 18 to 24 – 13% (of payments were cash)
• 25 to 34 – 12%
• 35 to 44 – 13%
• 45 to 54 – 16%
• 55 to 64 – 23%
• 65+ – 23%

Preferred Payment Method for Bills

According to a 2023 Consumer Payments survey by Fiserv, credit cards are the preferred payment option for all age ranges for purchases ranging from unplanned expenses of over $2,500 to trips to the grocery store. The report specifically notes the ability to earn miles and points as a main reason for a credit card preference, in addition to being able to spread out the payments over time.

The report also notes that 70% of consumers use a mobile to conduct day-to-day banking transactions, and 52% like the idea of a financial “super-app” that can bring together all their financial accounts to learn about their spending and even offer them tailored advice. These additional benefits point to a preference for credit cards as compared to using cash or paying directly from a bank account.

Preferred Payment Method for Online Shopping

E-commerce websites are set to generate as much as $58.74 trillion globally in online sales by 2028. That number represents a compound annual growth (CAGR) of 14.6% between 2021 and 2028. With continued growth expected beyond that, it’s little wonder that more is being done by providers to make paying for items online easier than ever before.

As many as 99% of all consumers still use some form of card when making a payment. So, while digital wallets may have emerged as the most popular method of payment, debit and credit cards remain the most consistently used by all online shoppers. 

These 2 forms of payment led the way by some margin when compared to other options. The full figures showed:

• Debit and Credit Cards – 99% (of consumers)
• Digital Wallets – 81%
• Installment Plans – 37%
• Bank Transfers – 10%
• Invoices – 8%
• Cash on Delivery – 3%

The ease of online spending has given way to an age of social media consumerism. Reports found that nearly 50.7% of online shoppers paid for items through Facebook across 2023. The full breakdown of social platforms was as follows: 

• Facebook – 50.7% (of consumers) 
• Instagram – 47.4%
• YouTube – 33.9%
• TikTok – 23.9%
• Snapchat – 18.8%
• X (Formerly Twitter) – 18.5%

Making it possible to pay for items while browsing these channels has contributed greatly to the continued growth of the e-commerce industry. 

Does the Way We Pay Impact How Much We Spend?

This ease and contactless approach to making a payment have had a tangible impact on our spending. This appears to be at its most extreme when making payments via card. A recent survey from Forbes Advisor found that 58% of people spend more when paying with a card. 

By contrast, just 7% of respondents felt like they overpaid when using a digital wallet. This additional control over finances was mirrored by cash payments, where just 23% of those asked thought they spent too much when paying in this way. 

This was reflected by the types of payments which trigger impulse decisions in consumers. 52% of respondents said they were likely to be more impulsive when using cards, compared to just 24% of those who were paying via cash.

Despite the modest numbers for overspending with digital wallets, it was still found that a large amount of people lost track of spending when using them. This followed a pattern that saw each generation feel more confident about their spending the older they were:

• Gen Z – 41% (of respondents said they lose track of spending)
• Millennials – 24%
• Gen X – 15%
• Baby Boomers – 6%

This shift in spending management could be attributed to the frequency with which each generation uses digital wallets. On average, across all age brackets, 21% of respondents found it harder to keep track of their spending when using this kind of payment system.

Final Thoughts

As we continue to shift towards a more cashless society, our thinking about spending is changing. While credit and debit cards are still a big part of our spending, the emergence of digital wallets has slowly begun to replace them as the go-to means of spending money. This is especially true in the case of e-commerce shopping. 

Despite that, credit payments continue to be the preferred method for most U.S. consumers. The convenience of this payment method means that millions still turn to this traditional system when paying for expensive goods. But for how long?