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  • Writer's pictureRoy Urrico

Co-op Solutions and PSCU Close Merger Deal; Issue Independent December 2023 Payment Reports

By Roy Urrico


Co-op Solutions and PSCU announced they have closed the deal to combine their two organizations. The combination agreement met all customary closing conditions and was overwhelmingly approved by owners and shareholders of both CUSOs.

On January 1, 2024, PSCU and Co-op began operational integration under a holding company led by a combined executive leadership team and previously announced board of managers (formerly known as board of directors), with headquarters in St. Petersburg, Fla. Chuck Fagan, previously PSCU’s president and CEO, will serve as CEO of the new combined organization. A new brand for the combined organization, known in the interim as PSCU/Co-op Solutions, is forthcoming. Prior to the formal announcement of the combination agreement the two organizations , issued separate December 2023 payments reports based on November transactions, which are summarized below.

Co-op Solutions Payments Trends Report

Within Co-op’s credit union clients’ payment portfolios, both credit and debit transaction volumes fell month-overmonth in November. Overall, Co-op Solutions’ credit union portfolio data shows that November transaction volume rose by 4.8% in credit and 1.5% in debit on a rolling 12-month basis, while month-over-month volumes fell by -2.6% in credit and -4.2% in debit.

The Consumer Price Index (CPI) rose by an 3.1% annualized rate in November, while core CPI (which removes volatile food and energy prices) increased by 0.3% for the month and 4% annually.


Co-op Solutions’ SmartGrowth Consulting Services, which contributed to the Trends Report, closely watched the following key spending trends:

  • · Black Friday offered mixed results. Overall, the period spanning from Black Friday through Cyber Monday boasted impressive results, with a record 200 million shoppers shopping in stores and online. However, the average spent per shopper dipped to $321.41 from last year’s $325.44. And while e-commerce traffic rose strongly to 134.2 million in 2023 versus 130.2 million in 2022, the number of people who visited physical stores fell slightly from 122.7 million in 2022 to 121.4 million 2023.Online shopping continues to grow in popularity, with more than one in four consumers shopping exclusively online on Black Friday. According to Adobe Analytics, 54% of Black Friday online sales came via smartphones.“Spending across sectors continues to tighten, as more consumers gravitate towards Amazon, digital goods and other online retailers,” said Ryan Prentice, director, SmartGrowth Consulting Services at Co-op. “This narrowing in spend, during a celebrated shopping season, is a further proof point of the importance of digitization across credit union services.”

  • Gen Z embraces BNPL. While overall holiday traffic at brick-and-mortar retail stores remained soft, those who are spending are more likely to use buy now, pay later (BNPL) than ever before. The report referred to a survey from PYMNTS Intelligence, which maintained consumers who used BNPL or other deferred payment options spent 48% more on holiday gifts this year than those who did not use such methods. “The challenge for credit unions is that if consumers are taking advantage of merchant-offered BNPL programs at the point of sale, those transactions won’t flow through their portfolios,” said Co-op Senior Payments Advisor John Patton. “Not only will they lose out on interchange income, but they won’t be able to view the member’s transaction data, so it won’t help them understand their shopping behaviors and offer the right products to fit their lifestyle.”

  • Travel, dining segments close out strong in 2023. “One of the biggest spending stories of 2023 has been consumers’ return to the levels of travel, dining out and entertainment not seen since before the pandemic,” noted Co-op Solutions in its Payment Trends Report. The travel category is up 15.4% in credit and 7.5% in debit for the 12-month rolling period ended November 2023. Similarly, dining and entertainment is up 7.1% in credit and 3.1% in debit over the same period.

Co-op suggested because BNPL is growing in popularity credit unions need to get in the game. Whereas pay-later and layaway-type programs offered through merchants offer consumers a high level of consumer convenience, they can be dangerous, as shoppers tend to spend more on impulse when offered the opportunity to defer payment at the point of sale.


Co-op noted major card issuers are offering their own versions of pay-over-time programs, which allow consumers to select recent eligible credit transactions to pay back over several months versus a single billing cycle. Co-op is in the process of rolling out a post-purchase pay-over-time option that is integrated with a credit union’s credit card offerings.


“Another benefit of BNPL and pay-over-time solutions is that they are great tools for credit building,” said Prentice. “This is just one more reason why credit unions should consider offering such options and packaging them into their financial wellness and educational programs, especially for the Gen Z segment.”


PSCU Payments Index

In the December 2023 edition of the PSCU Payments Index, PSCU presented the second installment of its three-part Deep Dive series on holiday spending, which included the results of the Black Friday through Cyber Monday shopping period. According to the National Retail Foundation, a record 200.4 million consumers shopped on Thanksgiving Day through Cyber Monday. Card spending growth for November increased year over year for debit, while credit activity held steady, largely driven by digital spending.


The Consumer Confidence Index increased to 102.0 in November following a consecutive three-month decline, up from a downwardly revised 99.1 in October. November’s increase in consumer confidence was focused primarily among households ages 55 and up, while confidence among households ages 35-54 declined slightly. Consumer sentiment around the expected financial situation over the next six months also rallied in November following a downward trend in the two months prior.


PSCU referred to the Labor Department’s Dec. 12, 2023 update, where the CPI increased 0.1% in November, bringing the 12-month rate of inflation to 3.1%, a slight decline from October. Decreases in the cost of gas and long-lasting goods offset increases in prices for housing and transportation. Core CPI, which excludes food and energy sectors, rose 4% year over year, up 0.3% from October.


“With retailers launching holiday promotions earlier each year, the longer promotion cycle has contributed to an overall slower pace of holiday spending. This year, the important Black Friday through Cyber Monday shopping weekend delivered positive year-over-year growth in consumer purchases and transactions in the Goods sector,” said Norm Patrick, vice president, Advisors Plus Consulting at PSCU. “As we approach the final stretch of the holiday shopping season, we will keep a watchful eye on whether consumers continue to spend or pull back, a key indicator of consumer financial health.”


A selection of key takeaways from the December report includes:

  • Year-over-year growth rates for payment cards were more sizeable for debit than credit, with debit purchase growth up 5% compared to 0.5% for credit.

  • Holiday spending in the goods sector improved in November when compared to October. Year-over-year growth in purchases for the overall goods sector was down 0.1% for credit and up 4.4% for debit in November. For the cumulative holiday season, card not present (CNP) growth outpaced card present (CP) growth for both credit and debit transactions. For the five-day peak shopping period that includes Black Friday to Cyber Monday, year-over-year Goods sector debit purchases (+5.6%) grew more than Goods sector credit purchases (+3.1%).

  • The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in November, while the 12-month rate of inflation was up 3.1%. Shelter continued to rise and offset a decline in gasoline. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.3% in November, putting the 12-month Core CPI index at 4.0%

  • Mobile wallets continue to gain popularity. For November, credit mobile wallet transactions represented 3.5% of overall credit transactions and debit mobile wallet transactions represented 6.0% of overall debit transactions.

  • The credit card delinquency rate for November reached 2.46%, an increase of 13 basis points from October.

  • Contactless penetration (CP) moderated in November 2023, with only credit contactless purchases, which expanded to 31% realizing growth. Debit contactless again captured 40% of CP transactions and 30% of CP purchases. The average contactless purchase amount continued to trend higher than 2022 levels, up 5% year over year for credit and 7% for debit. The availability of contactless cards has increased considerably over the past three years. PSCU’S 2023 “Eye on Payments” study reported 75% of credit union members have a contactless credit or debit card, up from 58% in the 2021 study.


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