Forty-eight percent (48%) of consumers — and nearly 63% of Gen Z — say the digitalization of payments has significantly changed how they approach spending

Frictionless payments are rewiring consumer spending habits, according to new research from NMI®, a global leader in embedded payments infrastructure. In its “Psychology of Payments” survey of 1,000 U.S. adults, half (50%) say they shop more frequently when payments feel seamless, while an equal share (50%) admit they abandon carts when the checkout process feels complicated or frustrating.

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NMI survey explores how the digitalization of payments has transformed spending behavior and payment preferences (Image: NMI).

Frictionless payments fuel higher conversions and average order value (AOV)
NMI’s research shows that seamless, incentive-driven checkout experiences are directly influencing how often and how much consumers spend. More than half (52%) say perks like gamified loyalty programs, cashback offers and buy now pay later (BNPL) rewards make them shop online more frequently. That rises to 72% among Gen Z and 67% for parents with kids under 25.

Consumers are also rethinking checkout choice. More than half (52%) say they prefer secure, one-click online checkout over a slower in-person interaction with a cashier. For busy parents, that preference climbs to 61%. Speed translates to spend, driving up average order value (AOV) as 48% say they spend more at checkout when the process is fast and frictionless.

At the same time, payment preferences reveal a generational shift. Physical credit and debit cards still dominate overall, but younger consumers are accelerating towards digital-first behaviors. Twenty-nine percent (29%) of Gen Z prefer digital wallets for both in-store and online purchases, compared to 18% of Millennials, 5% of Gen X and just 2% of Baby Boomers.

Yet digital natives are not abandoning traditional methods of payment as it helps them control their spending. While 44% of consumers overall say they try to use their debit cards to avoid carrying a hefty credit balance, this number rises to 47% of Millennials and 51% of Gen Z, compared to just 31% of Baby Boomers. Similarly, 13% of Millennials and 17% of Gen Z say they use cash to limit spending to what they physically have on hand, compared to just 9% of Baby Boomers and Gen X who report the same habit. The youngest consumers are simultaneously embracing digital speed and seeking guardrails against overspending.

Peter Galvin, Chief Growth Officer at NMI, said:
“This study confirms what we’re seeing across our platform: frictionless payments increase conversion rates, raise average order value and strengthen loyalty. Yet, many small businesses are falling behind; 40% of SMBs still don’t accept digital wallets and nearly half (47%) lack an ecommerce presence. As consumer expectations evolve, that gap becomes harder to close. The fastest way forward is partnering with software providers that embed modern, omni-channel payment capabilities directly into their platforms.”

Americans love convenient checkout but have concerns about financial literacy
While consumers embrace convenience, they are split on how digital payments have shaped their concept of money:

• Twenty percent (20%) say digital payments have given them more tools to track spending and strengthened their financial awareness.
• Thirty-three percent (33%) see both positives and negatives — they value convenience but also feel more disconnected from their finances and more likely to overspend.

Baby Boomers are least impacted by digital payments, as 44% say their views of money haven’t changed, whereas Gen Z is the most affected. Twenty-nine percent (29%) say their perception of money has worsened, as seamless transactions make spending feel less real. In fact, 37% of Gen Z admit they’ve spent more at checkout without realizing it, compared to 22% of respondents overall.

Flexible payment methods have also changed perceptions of affordability. Nearly a quarter (24%) of respondents overall, and more than a third (35%) of Gen Z, say they’ve used BNPL options specifically to make purchases feel less “real.” Additionally, over one-third (35%) of consumers say they’ve relied on BNPL to make purchases they couldn’t afford upfront, a behavior that jumps to 45% of Millennials and 49% of Gen Z, compared to just 31% of Gen X and 12% of Baby Boomers.

Seamless transactions may make life easier, but they can also make spending feel less visible and raise questions about how people track spending and maintain control. In fact, 88% of respondents overall, including 92% of Baby Boomers, say teaching financial literacy has never been more critical. Among Gen Z, that drops to 83%. Notably, Gen Z is also less likely to believe that children growing up with digital payments have a weaker understanding of money than past generations, revealing a generational disconnect: the group most immersed in digital wallets, and most likely to say money feels less “real,” is also the least concerned that financial literacy is deteriorating as payments go digital.

Galvin added:
“As money becomes increasingly digital, we’re seeing two parallel trends. For some consumers, digital tools increase visibility and control. For others, frictionless checkout removes the hesitation that once accompanied spending. The opportunity for fintechs is to embed transparency, financial tools and real-time insights directly into the payment experience. When financial awareness evolves alongside convenience, digital payments can reinforce healthy habits, and encourage smarter spending.”

For SaaS providers looking to embed payments into their platforms and empower merchants to drive seamless checkout experiences, visit: https://www.nmi.com/products/nmi-payments/

About NMI
NMI is powering the next generation of embedded payments with its modular payment acceptance platform and industry-leading gateway. Processing over $502 billion annually, we enable SaaS platforms, ISOs, PayFacs and banks to transform payments into a strategic advantage, driving growth, loyalty and new revenue streams.

Our modular, white-label platform puts partners in control, whether embedding payments into software or delivering payment services at scale. From no-code to full control API integrations, and from underwriting to compliance and risk monitoring, NMI handles the complexity so partners can focus on what matters most: their customers.

More than 6,000 technology partners trust NMI to deliver seamless, scalable payment experiences across online, in-app, in-store, mobile and unattended environments. However you are building the future of commerce, build it with NMI. Learn more at nmi.com.

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