If you have a Gen Z on your holiday gift list this year, it might be best to pass on one quintessential gift for young adults: a wallet.
About 4.4 billion people, or about half of the global population, are using digital wallets, and this number is expected to grow 35% by 2030, according to technology strategy firm Juniper Research. According to a 2025 report from the Federal Reserve, adults 24 and younger are most likely to use mobile phones to pay, with 45% of purchases made using mobile phones (across all ages, 23% of payments are made using mobile phones). Cash currently accounts for only 14% of all purchases, and is more likely to be used by people over 55 or in households making less than $25,000 a year. A 2024 McKinsey survey found that one in five people using digital wallets in the U.S. and Europe often leave home without a physical wallet, while in the U.K. only 38% of 18 to 24-year-olds own a wallet or wallet they consider essential in their daily lives, according to LinkScheme, a non-profit organization dedicated to providing cash access in the U.K. People are increasingly ditching cash, with 30% of Americans saying they haven’t withdrawn cash from an ATM in the past month and 17% saying it’s been more than six months, according to a LendingTree survey.
This shift is changing the way they think about spending money. For older generations, cash is real; For young people, it could also be Monopoly money. Hailey Moore, 26, of Los Angeles, told me she hasn’t had a wallet in more than a decade and rarely carries cash. If she did get some, perhaps in a birthday card, it felt like fun money: “If I had cash on me, it wouldn’t be there,” she said. And it disappears quickly. “I could use this to treat myself.”
For young shoppers, cash has lost its cachet.
Apple Pay came out 11 years ago, but people were slow to put credit cards on their phones; there seemed to be no better use case for bugging phones than swiping a credit card. That changed a lot when contactless payments gained traction during the pandemic and Apple Pay became easy to use when shopping online. Nowadays, digital payments and bank cards are becoming more and more important. The pennies cost about twopence each to produce and went out of print in November. Currently, more than 250 airports in the United States accept digital IDs for domestic flights. More and more daily activities can be completed with just a mobile phone. Oura is even working on how its smart rings can be used as wallets and keys.
If I have cash on me, the money doesn’t exist. I can treat myself to this.
Haley Moore, 26
Adam Gray, chief transformation officer of payment technology company Stax Payments, said that as digital wallets are used more and more frequently, people “trust digital wallets more than they trust cash.” They are more secure than carrying a physical wallet full of cash and cards. “We’re trying to get as many businesses and places to accept it because it’s better for everyone.”
Historically, people have tended to pay more with credit cards than with cash. But that may be changing among Gen Z—a Cash App survey released last month found that 54% of Gen Z said they were more likely to spend money without thinking. The money that has been withdrawn from your bank account or deposited from your aunt’s card may feel inconsequential compared to the ever-increasing numbers on your credit card bill that you have to face at the end of the month. Moore also told me that she primarily uses her debit card and only uses her credit card for large purchases or places where she knows she can earn points, such as gas stations and grocery stores. She mainly wanted to build credit and pay off her credit cards early to avoid overspending her bank account.
Shoppers have different feelings about using cash versus credit cards. A 2023 study from the University of Notre Dame found that people prefer to pay cash for things that make them feel guilty. But credit cards can also cause a dopamine rush to stimulate consumption—researchers at MIT found that using credit cards can activate reward pleasure sensors in the brain, making people addicted to spending, or at least lowering their limits on spending. (The researchers of the 2021 study didn’t look at contactless mobile payments, but did say that the pings from followers as they make purchases on their phones can remind people to spend money and curb casual clicking behavior).
The act of being the first to throw your card in at a check at dinner and reap the biggest rewards is appealing to travelers, but more and more young people are quickly adopting “buy now, pay later” companies like Klarna and Affirm. Research from JD Power shows that Gen Z used BNPL services more than credit cards last holiday season. Sean Gelles, senior director of payment intelligence at JD Power, said that for people who use these services, “payment terms are more reasonable and transparent than credit card payment terms.” Frances Boyle, 29, of Seattle, said she used buy-now-pay-later clothing services. “It was almost a way of justifying the purchase because I thought, ‘I can’t spend more than $100 right now. But $20 a month, that doesn’t sound bad.”
Data from PayPal shows that BNPL can increase people’s spending at large businesses by 91% and at small businesses by 62%. Half of shoppers say they are more likely to complete a purchase when an installment option is available at checkout. But what is now a frictionless way to buy small things online can turn into an annoying payment method that lasts for months, or even a huge amount of debt down the road.
Ditching cash may seem convenient, but digital wallets don’t cover everything.
Tori Khutorna, 28, who lives in Prague, said she no longer owns a wallet – she uses a digital wallet and an app that contains her ID. It all started with online shopping during the COVID-19 lockdown. “Going forward, I didn’t see any real need for cash.” But her plans hit a snag while traveling. Kutona also said that when she was in Ukraine, a major power outage disabled card payment methods nearby, forcing her to ask strangers for cash to buy food and then transfer the money to her. Once, when she was in Italy, she couldn’t buy a bus ticket because the card machine was broken. She was fined for not having a ticket (conveniently, the fare enforcer had a device that allowed her to pay the fine instantly using Apple Pay). Without cash, she told me, “sometimes, I really feel disconnected from reality.” When she sees a beautiful purse for sale, she sometimes wants to buy it. “Then I guess, for what?”
For young people bidding farewell to their wallets, the world may soon be catching up.
amanda hoover is Business Insider’s senior reporter covering the technology industry. She writes about the biggest tech companies and trends.
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