Consumer digital payments: Already mainstream, increasingly embedded, still evolving

The COVID-19 pandemic catalyzed digital payments,1 driving increased adoption across virtually all categories. Three and a half years since the pandemic’s beginning and despite a return to in-person commerce, these gains have been sustained and, in some cases, accelerated even further. Consumers signal increasing openness to new technologies, with convenience and user design continuing to advance adoption.

These are among the key findings of McKinsey’s 2023 Digital Payments Consumer Survey, the eighth in an annual undertaking that explores various aspects of consumer preference and behavior. The resulting insights serve as valuable tools to inform payments providers’ efforts to establish and extend retail relationships.

Our August survey of more than 1,800 US consumers offers a window into the consumer mindset amid a shifting economic landscape. Among other highlights, it documents a critical shift in the trust consumers have granted banks relative to technology firms, as well as an increasing level of cost consciousness. In addition, attitudes toward buy now, pay later (BNPL) services may prove surprising.

Growing adoption, with signs of consolidation

For the first time, more than nine out of ten consumers say they have used some form of digital payment over the course of the year. This metric has grown steadily over the survey’s eight years and accelerated during pandemic lockdowns. It first exceeded 80 percent of consumers in 2021.

Among categories of digital payments, the leader of the pack continues to be purchasing online, defined as “buying things and/or paying for services through a website/browser on a computer, phone, or tablet.” Seventy-three percent of respondents report making such a digital payment in the past year (Exhibit 1). More striking is the recent growth in the in-app and in-store categories. Both categories dipped slightly in 2021, during declines in activities like ride sharing and shopping at brick-and-mortar stores. As consumers return to such activities, many are applying digital behaviors they developed online. Use of in-store digital payments is particularly strong among 18- to 24-year-olds, whose 32 percent adoption rate is double that of the 55-plus cohort.


Another notable change is a trend toward consolidation of digital wallets. As recently as 2021, 30 percent of consumers anticipated maintaining three or more digital wallets (for example, Samsung Pay, Google Pay) on their phones. In 2023, this share has fallen to 20 percent. Conversely, the share of respondents expecting to rely on a single wallet rose from 21 percent to 31 percent over the same period.

Among criteria for selecting a wallet, security and trust in the provider have solidified their status as table stakes, with 69 percent of respondents saying this benefit is among their top criteria. The next most commonly cited factors, ease of use and low cost (selected by 58 and 46 percent, respectively) also distanced themselves from the pack relative to past surveys. Regarding cost, nearly three in five respondents indicate that the economic uncertainty of the past year has influenced how they select financial services providers, noting lower financing fees and higher rates on deposits as motivators. Compared to other age groups, the 18-to-24 cohort seems particularly motivated by in-app savings features such as store coupons and retailer deals or offers.

Large tech firms narrow the consumer trust gap with banks

Financial institutions have long enjoyed a distinct advantage in consumer trust—a key factor in consumers’ selection of a digital wallet provider, as we expect it is in the selection of financial relationships more broadly. Large banks have retained this edge, with 50 percent of consumers reporting a high level of trust in them, versus 41 percent for large tech companies (Exhibit 2). However, the banks’ advantage over Big Tech is narrowing rapidly.


By some measures, large tech companies have surpassed regional and community banks in terms of trust related to digital payments; it has nearly identical levels of low trust as both banking cohorts, while large banks still lead the pack in high trust at 50 percent of respondents.

For all four categories of institutions, consumers reported declining levels of trust. However, large tech firms experienced the least erosion of support. While trust ratings for banks have declined at a relatively constant rate, large tech firms have gradually whittled away at the percentage of consumers giving them low marks (which hovered in the 25 percent range in recent years).

Fintechs, which already rated lowest in trust among the four provider categories, encountered the steepest 2023 drop in perception. Its trust levels vary considerably by consumer age. Only 8 percent of the 55-plus demographic rates fintechs favorably, versus 51 percent unfavorably. The 18-to-24 demographic also regards fintechs with the lowest trust and large banks with the highest, but the differences are less pronounced. Interestingly, this age group rates large tech less favorably than the 55-plus demographic.

Increasing comfort with technology providers may also be influencing the broader delivery of financial services. More than a third of respondents would consider using generative AI for financial advice and/or planning services, an unusually high figure for a capability that was little known to the general public less than a year earlier. Many of those interested have reported positive experiences with gen AI in nonfinancial settings and trust the technology to provide sound financial advice and/or believe it can provide better returns than traditional advisors.

Large technology firms have been extending their reach into payments for some time. Consider a pair of financial products launched by Apple in early 2023 that quickly gained traction: Apple Savings and Apply Pay Later. Ten percent of respondents report adopting Apple’s new savings account, and of these, nearly half say its high yields lead them to maintain significantly higher balances. Other tech companies are actively investing in payments and the fintech landscape.

Respondents who indicate they have used BNPL in the past year most frequently identify the provider as Affirm, Afterpay, Klarna, or PayPal (each cited by about 20 to 30 percent), but 13 percent identify their provider as Apple Pay Later, despite the survey’s timing within six months of the product’s launch. Further, another 22 percent express interest in the service.

BNPL’s rapid adoption has slowed- but inroads are evident

BNPL, though a relatively new form of credit, is experiencing a slowdown in its rapid pace of adoption. Nevertheless, despite heightened regulatory scrutiny, it shows signs of having entered the mainstream: 29 percent of respondents report using such a service over the past 12 months, and another 15 percent indicate interest in using it. Both figures have remained essentially stable since 2021.

BNPL’s impact on other forms of payment is variable. The plurality of BNPL2usage (40 percent) displaces credit cards, and a further 29 percent of consumers say they use it instead of debit cards or cash. In addition, 12 percent of users say their purchase would not otherwise have been made, and a further 19 percent would have made smaller ones. Sales lift is particularly notable in disposable-income-linked categories like electronics, apparel, beauty/personal care, jewelry, and home improvement.

In line with consumers’ pursuit of convenience, the shopping ecosystems of BNPL providers are having an impact. Eighty percent of BNPL users say they have started a shopping journey at the website of a BNPL provider, as opposed to the retailer’s site. Thirty percent of users report conducting the majority of their BNPL purchases in this fashion. From a spending perspective, 43 percent of overall BNPL transactions began at the provider, indicating a material source of incremental sales.

As US consumers’ digital payments evolve, we continue to refine our annual survey to elicit fresh insights on the developing landscape. The economic climate’s impact in the coming year will likely extend to digital behavior. Existing indicators of shifting trust and wallet deployment across various channels already provide clear markers for payment providers and retailers.

Jeana Chen is an engagement manager in McKinsey’s New York office, where Roshan Varadarajan is a partner; Deepa Mahajan is a partner in the San Francisco office, where Marie-Claude Nadeau is a senior partner.

1 We define digital payments as use of a computer or mobile device (e.g., phone or tablet) to purchase goods and services either through an app, through a website, or at a store by interacting with a terminal.

2 We define BNPL as a loan or line of credit that finances a specific purchase and allows payment over time in monthly, bi-weekly or weekly installments.

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