Whether it’s at Dollar General, Whole Foods or somewhere in between, most Americans don’t experience the unpleasantness of getting dinged when trying to check out for their purchase. But for adult consumers roughly age 18-29 this year, declined payments have become a routine frustration. One in 4 Gen Zers report that a purchase they tried to make on their credit card, debit card or digital wallet was rejected in the past month. The average amount: $263, the most of any generational cohort, and five times the $53 for boomers and seniors.
For the latest edition of the “How People Shop and Pay” report, PYMNTS Intelligence surveyed 2,108 U.S. adult consumers during the final weeks of November and first week of December. On average, nearly 1 in 7, or 15%, of all consumers experienced a payment decline during the past 30 days, the height of the holiday shopping season. The 1-in-4 ding rate for Gen Z shoppers mean they’re two-thirds more likely than the average shopper (and about six times as likely as the typical baby boomer) to see their payment not go through.
Overall, 7% of consumers suffered a payment decline on their last grocery or retail purchase over late November to early December. Nearly 1 in 6, or 17%, saw their payment rejected at Amazon Whole Foods. Some 12% shopping for groceries at Dollar General were dinged, as were 4% trying to pay for non-grocery items. Nearly 1 in 10 Walmart shoppers had a payment declined.
‘No sale’
Regardless of how they tried to pay, the “no sale” verdict could have materialized for a number of reasons. The most obvious one is insufficient funds in the bank to cover a purchase by debit card. That roadblock is behind 27% of all payment declines, including 4 in 10 rejections for boomers. Curiously, that trips up fewer than 2 in 10 (18%) Gen Zers, even though they often have entry-level. lower-paying jobs. Instead, the youngest adult shoppers encounter different trip wires.
Because they’re early in their professional careers and still building their credit profiles, Gen Zers may have lower spending limits on their credit cards and exceed them when trying but failing to check out that new sofa. They’re more than twice as likely as boomers to say their last payment decline was because they didn’t have enough available to spend on their credit card.
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The most recent Federal Reserve data shows that revolving balances, most of credit card debt but also personal loans and home equity revolving lines of credit (HELOCs) slipped 1.9% last November to $1.3 trillion.
Being young has another potential drawback when it comes to spending and paying.
Because many Gen Zers don’t have a long-term track record of paying on time and are just starting to build credit records with Equifax, Experian and TransUnion, financial institutions may be more likely to flag some of their transactions as high risk.
Findings from the “FICO® Score Credit Insights Report” showed that Gen Z saw the biggest year-over-year credit score drop of any generation, with student loan debt proving to be a big financial burden. This month, the Department of Education began garnishing up to 15% of wages of some borrowers in default, crimping budgets and harming credit scores. The average Gen Z credit score is 676, below the national average of 715. Both are “good” but below the “prime” designation that to higher credit limits and lower interest rates.
Sketchy Purchases?
Meanwhile, nearly 3 in 10 consumers in the PYMNTS survey said their last retail payment didn’t go through was because the bank flagged the transaction as suspicious. Equally as many said their payment was declined because the financial institution behind their card deemed the purchase “unusually large” based on their spending habits.
What’s ironic is that while Gen Zers are relatively good at taking steps to bolster their financial literacy, they’re sometimes clueless about the basic mechanics. PYMNTS Intelligence’s “Gen Z Decoder Ring” finds that nearly two-thirds of them took advantage in childhood and early adulthood of resources to improve their financial literacy (versus 41% of boomers). Plus, 85% of Gen Zers saved up for big-ticket expenses when they were kids, demonstrating their forward-looking approach to finances.
But even the digital-native generation, which has never known a world without the internet and keyboards, can sloppy. Nearly 3 in 10 (27%) whose recent payment was declined wound up with that result because they incorrectly entered their PIN or other payment details. Only 8% of boomers and Gen Z with payment declines messed up that bit.
When retail payments are declined, digital wallets are increasingly where the rejection happens. Thirty-one percent of declines last November were for payments made through digital wallets, more than twice the rate since last February. Meanwhile, decline rates for physical credit and debit cards fell over that same period, highlighting how digital wallets — apps on mobile phones, tablets or computers that store debit and credit card credentials, along with event tickets and boarding passes — are capturing a bigger share of the retail payments industry.
But regardless of an owner’s annual household income, digital wallets trigger more declines due to the bank flagging suspicious activity than credit or debit cards. That may signal either that wallets are bigger gateway to fraud, or that the banks and service providers behind them are erroneously flagging some legitimate transactions as bogus.
People under “high financial stress,” defined as experiencing cash shortfalls for living or emergency expenses in the last 90 days, are the most likely to use digital wallets to buy groceries and other retail products. With tighter pocketbooks, they’re the most likely to bump up against payment declines due to insufficient funds.
That 50% increase is far greater than the population-wide rise in payment declines. In the same period (November 2024 to November 2025), the share of consumers who’d had a payment declined in the last month only rose 15%.
These payment declines aren’t just an issue for consumers. They also lead to reduced sales for merchants, especially if payments are falsely flagged. The latest edition of PYMNTS Intelligence’s “Payments Orchestration Tracker®” cited findings that nearly half of all merchants — 47% — estimate that up to 5% of legitimate orders are wrongly dinged as fraudulent, leading to an estimated $50 billion in revenue losses all.
Plus, it can hurt merchants’ customer retention. PYMNTS Intelligence research finds that the same share (47%) of retailers say false declines have a very or extremely negative impact on customer satisfaction.
Read more:
Latest Government Credit Data Signals a Reset and Resilience
The New Checkout: Crimped Consumers Lean Into Online Retail and Digital Wallets
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