Dive Brief:

• The debit card is still the prevailing method of payment at the point of sale, market research firm J.D. Power found in a poll of 7,756 consumers about their payment habits and preferences. The study was conducted between September and November, according to a Thursday press release about the report.
• The use of debit cards, by far the most common form of payments, is driven by young people. Among Americans under 40 years old, 82% use debit cards, according to the organization’s research, beating credit cards, cash, checks and digital wallets. Digital wallets, however, stand to overtake debit cards, J.D. Power found.
• Consumers gravitate toward debit cards, thanks to the speed and ease of use, but younger customers also find digital wallets fast and easy to use, according to J.D. Power.

Dive Insight:

The use of alternative payment methods like digital wallets — an app on a consumer’s phone that lets them immediately access various payment methods — skyrocketed between 2023 and 2024, according to research from J.D. Power. The firm found that 48% of consumers used digital wallets at the point of sale in its 2024 study, up from 36% in a survey earlier this year.

Meanwhile, the proportion of consumers swiping, dipping or tapping a debit card fell by six percentage points, relative to an earlier survey, J.D. Power said.

“Both of these (differences) are statistically significant,” Sean Gelles, senior director of payments intelligence for J.D. Power, said in an interview on Wednesday.

It’s hard to say when digital wallets will overtake debit cards, he said. “I don't think we can make that kind of prediction given the data that we have,” Gelles said.

But he added that the growth of digital wallets is undeniable, and likely irreversible. 

Consumers can access their debit card through a digital wallet, but J.D. Power differentiates between those payment methods because the customer uses their smartphone, rather than a physical card, when they pay with a digital wallet.

In a news release, J.D. Power said it expects a “slow deterioration” in the direct use of debit cards as more consumers become aware of, and comfortable with using, digital wallets.

The change has broader implications, Gelles said. Debit cards give banks a way to develop a deeper relationship with their customers, and that connection is lost if the transaction comes through a digital wallet, rather than a card issued by a customer’s bank, he said.

Even if a consumer uses the debit card in their digital wallet, the connection is between the consumer and the company that owns the app — Google or Apple, in most cases — not the debit card issuer, J.D. Power found.

“At that moment, they’re having an Apple Pay experience, or a Google Pay experience,” Gelles said. “The whole point was they should be having a Bank of America experience.”

To remain relevant, debit card issuers will need to convince consumers their product is indispensable, J.D. Power said in its news release.

Issuers can accomplish this by “focusing on value-added experiences related to budgeting, security, or rewards, all of which have strong influence on debit card user satisfaction when delivered well,” the release said.