Skip to Main Content
Personal Banking Home
Small Business Home
Commercial & Specialty Home

Don't get left behind: what customers expect from small business payments in 2026

by
Woman and daughter looking at vase

If it feels like customers have more ways to pay than ever, you’re right. Digital wallets, mobile apps, tap-to-pay, QR codes, even splitting a tab has gone contactless. But with all this choice comes expectation. Today’s shoppers want payment options that feel fast, flexible, and tailored to them.

For small businesses, that means your payment experience is part of your customer experience. It’s not just about how you accept payments. It’s about how those methods align with the people you serve. This article explains how payment preferences are changing in 2026, and how your current setup can adapt.

 

Understanding today’s payment preferences by generation

Digital payment preferences vary significantly by age, and knowing the differences helps you serve each segment better:

Get up to speed fast: how each generation expects to pay. How different generations prefer to pay Generational preferences can tell you a lot about how to shape your payment options: Gen Z (born 1998–2013): - 79% regularly use digital wallets. This group expects fast, mobile-first options.¹ Millennials (born 1982–1997): - 67% use digital wallets, and many prioritize convenience and digital security.² Gen X (born 1966–1981): - 44% have adopted digital wallets, though many still prefer credit cards.³ Baby Boomers (born 1946–1965): - 26% use digital wallets, and adoption is rising, especially for contactless and online payments.⁴ If you serve a mix of age groups, offering a range of options is key to creating a smooth experience for all. First Horizon lets you serve Gen Z through Baby Boomers seamlessly. Connect with a First Horizon banker at www.firsthorizon.com/Small-Business. Source: 1. PYMNTS Intelligence,

1 PYMNTS Intelligence, "55% of High-Earning Consumers and 79% of Gen Z Use Digital Wallets,"
https://www.pymnts.com/mobile-wallets/2024/55percent-high-earning-consumers-79percent-generation-z-use-digital-wallets/

 

Gen Z (born 1998–2013):

  • Over 50% prefer digital wallets (Apple Pay, Cash App, Venmo)1
  • Expect mobile-first, tap-to-pay options2
  • Prefer informal, textable, and mobile app interactions3

Millennials (born 1982–1997):

  • Blend credit cards with digital wallets4
  • Appreciate loyalty perks and cashback options5
  • Tend to research purchases more than older generations6

Gen X & Boomers (born 1946–1981):

  • Credit/debit card loyalists prefer familiarity and clear receipts7
  • They value simplicity and might not like app-only experiences8
  • They may have questions about newer payment tech, and staff guidance is helpful9

“Your payment options send a message about how well you understand your customers,” says Autumn Tinnel, Head of Merchant and Payroll Processing at First Horizon. “It’s a big part of whether they choose to come back.”

 

Why your payment experience drives loyalty

Your customers may not remember a smooth checkout, but they will remember a frustrating one. And they’ll take their business elsewhere if it happens more than once.

Friction in payments causes cart abandonment, lost sales, and missed opportunities to build relationships. Long lines, unclear signage, or limited payment methods add invisible costs to every transaction.

Businesses that optimize for ease, like enabling contactless payments, setting up loyalty programs, or streamlining refunds, tend to see higher return rates and better reviews.

A comparison chart titled “The real cost of checkout friction: lost sales, lost loyalty.”“Smooth checkout vs friction: the real cost”. The chart has two columns: “Smooth checkout” in blue and “Not-so-smooth checkout” in red. Customer action: Smooth checkout shows a checkmark with the text “Quick checkout, repeat sale.” Not-so-smooth checkout shows an X with the text “Leads to cart abandonment.” Word of mouth: Smooth checkout shows a checkmark with “5-star reviews and referrals.” Not-so-smooth checkout shows an X with “Negative word-of-mouth.” Revenue impact: Smooth checkout shows a checkmark with “Lifts average order/repeat spend.” Not-so-smooth checkout shows an X with “Lost sales impact bottom line.” Long-term effect: Smooth checkout shows a checkmark with “Builds loyalty and lifetime value.” Not-so-smooth checkout shows an X with “Lasting negative impact.” First Horizon Small Business logo appears at the bottom.

What small businesses should consider when updating payments

Upgrading your payment experience doesn't mean rebuilding from scratch. Here are a few strategic actions that First Horizon often recommends:

  • Offer payment variety. Accept digital wallets, mobile apps, cards, and ACH to cover preferences.
  • Simplify and clarify. Reduce checkout steps, especially online. Use clear signage in-store.
  • Enable faster flow. Mobile readers, self-checkout, or handheld devices help reduce lines.
  • Connect loyalty. Tools like Clover’s app marketplace let you integrate loyalty and CRM at checkout.
  • Ensure security. Use AVS, CVV, and transaction limits to reduce fraud risk.
  • Maintain compliance. Clover helps simplify PCI compliance with built-in guidance.

Many of these upgrades take just minutes to implement and can lead to lasting business impact. 

 

Real businesses. Real results.

Here’s how First Horizon clients have aligned payment methods to customer expectations:

  • A food truck started with a mobile card reader and later upgraded to handheld devices that helped speed up service and better manage long lines during peak hours.
  • A hair stylist uses mobile payments and appointment-setting tools from the Clover app market to simplify scheduling and reduce client no-shows.
  • A plumbing business transitioned from paper checks to mobile invoicing, which made it easier for customers to pay on the spot and improved cash flow.
  • A healthcare provider uses countertop systems for front-desk co-pays and virtual terminals in the back office to securely manage recurring payments.

These changes weren’t just about technology. They were about building a better customer experience.

 

Self-check checklist to see if your payment setup is still a fit 

FAQs: Small business questions about payment trends

Q: What was most popular way to pay in 2025?
Digital wallets (Apple Pay, Google Pay, Cash App) are the fastest-growing method, especially among Gen Z and Millennials.10

Q: Do I need to offer every option?
No, but you should cover the most expected ones. A mix of cards, contactless, and wallets is ideal.

Q: How do I choose a system that grows with me?
Look for platforms like Clover that offer starter setups and scale into countertop systems, handhelds, and online gateways. First Horizon bankers can help you map your best path.

 

The right payment experience can fuel your growth

When you match your payment setup to how your customers want to pay, you remove friction and add loyalty. It becomes easier to deliver standout service, simplify operations, and grow revenue.


Want to see if your payment setup is still working for your business? A First Horizon banker can help you explore what’s changed and what’s possible.

 

Talk to a Banker


Sources:

1 Federal Reserve, "Banking my way — Gen Z and millennials are driving change in payments,"
https://fedpaymentsimprovement.org/wp-content/uploads/042624-consumer-brief.pdf

2 EY, "How Gen Z is changing the payments landscape,"
https://www.ey.com/en_us/insights/payments/how-gen-z-is-changing-the-payments-landscape

3 Kantar, "Paper, Plastic or Pixels: Payment Preferences by Generation,"
https://www.kantar.com/north-america/inspiration/research-services/payment-preferences-by-generation-pf

4 Kantar, "Paper, Plastic or Pixels: Payment Preferences by Generation,"
https://www.kantar.com/north-america/inspiration/research-services/payment-preferences-by-generation-pf

5 Kantar, "Paper, Plastic or Pixels: Payment Preferences by Generation,"
https://www.kantar.com/north-america/inspiration/research-services/payment-preferences-by-generation-pf

6 Forbes Agency Council, "Understanding The Research On Millennial Shopping Behaviors,"
https://www.forbes.com/sites/forbesagencycouncil/2018/06/04/understanding-the-research-on-millennial-shopping-behaviors/

7 PXP Financial, "Gen X Prioritises Security Over Convenience in Payment Choices, PXP Report Finds,"
https://www.businesswire.com/news/home/20250708925398/en/Gen-X-Prioritises-Security-Over-Convenience-in-Payment-Choices-PXP-Report-Finds

8 PXP Financial, "Gen X Prioritises Security Over Convenience in Payment Choices, PXP Report Finds,"
https://www.businesswire.com/news/home/20250708925398/en/Gen-X-Prioritises-Security-Over-Convenience-in-Payment-Choices-PXP-Report-Finds

9 Computer Talk, "Generational Customer Service: Gen Z to Baby Boomers,"
https://www.computer-talk.com/blogs/generational-customer-service-gen-z-to-baby-boomers

10 PYMNTS, "85% Of Gen Z Prefers Digital Payments to Cash,"
https://www.pymnts.com/digital-payments/2024/85percent-of-gen-z-prefers-digital-payments-to-cash/