Consumer Payment Behavior by Income and Demographics 
Previous research has found that consumer payment behavior varies with income and demographic characteristics and that within demographic cohorts, consumers frequently exhibit different patterns of payment instrument use. Some of these within-cohort differences have been attributed to the perceived safety, convenience, or cost of using a given payment instrument. This paper uses data from the 2023 Survey and Diary of Consumer Payment Choice (SDCPC), a nationally representative diary survey of US adults, to examine how consumer payment behavior varies by income and demographic attributes and test whether these factors matter more than consumer perceptions of payment instruments’ characteristics.
In addition to examining the adoption and use of paper, card, and electronic payment instruments, the authors look at consumer behavior surrounding payment innovations, including the use of buy now, pay later (BNPL); holding cryptocurrency; and adopting mobile payment apps. They study how the adoption and use of these newer payment options vary across consumers with different demographic attributes.
Key Findings
- The most significant factors affecting the adoption and use of any payment instrument in 2023 were income, age, education, and credit scores—the same factors that were important a decade ago.
- Consumers’ assessments of the characteristics of a payment instrument also influenced their decision on whether to adopt that instrument.
- Consumers’ choices concerning payment innovations, including the use of mobile payment apps, BNPL, and cryptocurrency, were affected by demographic and financial attributes. In addition to age, education, and income, race affected BNPL use and the acquisition of cryptocurrency.
- Higher self-reported FICO scores were associated with a higher likelihood of adopting a checking account and using credit cards, and with a lower likelihood of using cash and debit cards.
Implications
Patterns in the adoption and use of payment instruments that were identified in studies from more than a decade ago have persisted: Age, education, and income remain the most important determinants for the adoption and use of paper, card, and electronic payment instruments. The same demographic and financial factors also significantly affect the adoption and use of new payment options, including mobile apps and BNPL.
Abstract
Despite the introduction of an array of innovations and new payment options for consumers over the last decade, income and demographics remain significant predictors of payment behavior. Using data from a 2023 consumer payments diary, we find that income, age, and education are significant predictors of which payment instruments consumers adopt and use. These associations hold not only for traditional payment instruments—cards and paper—but also for innovations such as mobile apps; buy now, pay later (BNPL); and cryptocurrency. In 2023, less educated consumers were significantly less likely than other consumers to adopt any payment instrument, especially checks and electronic payments, even when we control for income and employment. After controlling for education, we find that high-income consumers used credit cards significantly more relative to other consumers. Younger and more educated consumers were most likely to adopt mobile payment apps. Women, Black and Latino consumers, and those who had filed for bankruptcy in the previous year were significantly more likely to have used BNPL. Men were nearly three times as likely as women to adopt cryptocurrency.