Gen Z’s reliance on digital wallets is reshaping how young consumers pay for purchases—and changing how some view physical cash, Business Insider reports.
Adults 24 and younger make 45% of their purchases by phone, nearly double the 23% rate across all age groups, according to a 2025 Federal Reserve report. Cash, meanwhile, accounts for just 14% of purchases.
The shift is particularly pronounced among younger consumers who have grown accustomed to
Apple Pay, mobile banking, and other digital payment platforms. The outlet reported that some Gen Z consumers increasingly view physical cash differently from money held in their bank accounts, making it easier to spend.A Cash App survey found that 54% of Gen Z respondents said they were more likely to spend cash thoughtlessly
. The finding runs counter to longstanding research suggesting consumers generally spend more when using credit cards instead of cash.Digital wallets are also becoming more prevalent. About 4.4 billion people worldwide use digital wallets, a figure projected to increase 35% by 2030, according to Juniper Research.
A LendingTree survey found that 30% of Americans did not withdraw cash from an ATM in the previous month.
Gen Z consumers are also turning to other digital payment options. Young shoppers used buy-now, pay-later services more than credit cards during the 2024 holiday season, according to J.D. Power research. The financing option allows consumers to divide purchases into smaller installments instead of paying the full cost up front.
That convenience can influence spending. PayPal data found that consumers spend more when buy-now, pay-later options are available, particularly when shoppers can split purchases at checkout.
The continued move away from cash could have broader implications for how younger consumers manage their money.
Digital payments offer speed and convenience, but they can also make spending less tangible as transactions increasingly happen with a tap of a phone rather than an exchange of physical money.
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