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Writer's pictureRoy Urrico

Velera ‘Eye on Payments’ Study Shows Preferences Evolving Toward Convenience and Flexibility

Updated: 4 days ago

By Roy Urrico


Payment preferences continue to evolve as consumers’ expectations change. The demand for convenience, flexibility and security is influencing which methods are top of wallet. Those findings are featured in Velera’s (formerly PSCU/Co-op Solutions) seventh annual Eye on Payments study, which measures the preferences among credit union members and other financial institution customers.

 

Velera surveyed 1,850 credit union members and non-members in June and July 2024 from across the U.S. for this research study that explores the factors influencing consumers when it comes to choice and usage of different payment methods. The study also looks at how these factors may vary among different life stages and economic events and how credit unions can better serve members and optimize their offerings to adapt to these evolving preferences and needs.

 

“Ever evolving and rapidly changing, the payments industry has proven itself resilient, experiencing significant transformation and innovation over the past year amid shifting consumer preferences and behaviors. For the first time in recent years, consumers are reporting they prefer credit over debit when it comes to their preferred top-of-wallet payment method – a shift that can be attributed in part to intensifying macroeconomic challenges and global instability, along with an increase in reported fraud incidents in online channels,” reported the Eye on Payments study.

 

Consumers also continue to turn toward payments options like mobile wallets and person-to-person (P2P) payment mechanisms including Zelle, Venmo and PayPal, while exploring payments programs like buy now pay later (BNPL) more frequently. Younger generations (ages 18 to 43) are driving a majority of these preferences and shifts.


Trends and Takeaways

 

Following is a digest of tendencies and insights presented by the study:

 

  1. A shift in consumer preferences has surfaced – credit ranks as the top preferred payment method, with debit trailing closely behind. Thirty-seven percent of all consumers say credit is their top preferred payment method. Consumers switched preference to credit over debit when making purchases at full-service restaurants, large/big-box retailers and gas/fuel providers, as well as when paying for an item between $30-$200, buying tangible goods and for monthly subscriptions. Debit remains a close second with 35% of consumers reporting it as their preferred payment option. In line with this finding, 31% of consumers reported that they applied for a new credit card through their financial institution within the last 12 months, up from 25% in 2023 and 20% in 2022. “It is more important than ever for credit unions to focus on credit card product development, innovation and customization,” recommended the Velera payment report. This includes expanding credit card offerings by tailoring rewards and incentives, while also prioritizing features like digital issuance and mobile wallet card characteristics.


  2. Consumers care about card design, capabilities and features. Fifty-five percent say that card design – ranging from type of card material (like metal) to whether it is produced sustainably, among other attributes – influences which card they choose. Three-quarters of credit union members also indicate that rewards are important when choosing whether to use debit (73%) or credit card (75%). Emphasizing rewards programs, cashback options and flexible credit lines could help capture interest and meet growing demand. 


  3. Consumers continue to turn to digital payment options like mobile wallets. Half of credit union members report they use a mobile wallet at least a few times per month, up from 34% in 2023 and 27% in 2022. In fact, the number of credit union members who never use the technology took a sharp dive. Mobile wallets and digital payment options are clearly here to stay, meaning credit unions that do not yet offer these types of technologies or easy integrations need to quickly consider how to add them to their arsenal, claimed the report. 


  4. Safety and security are top of mind as fraud continues to rise. Eighty-three percent of credit union members are very concerned about identity theft – and with good reason, as overall incidents of fraud have been increasing since 2021. Ten percent of credit union members experienced identity theft and 14% reported they were victims of card fraud, compared to just four percent and eight percent in 2021, respectively. Of the card fraud incidents, more than 75% took place online. Eighty-two percent of credit union members report they make a decision about how to pay for something based on which is the most secure. Unfortunately, noted the report, for both consumers and financial institutions, fraud incidents are only anticipated to remain on an upward trajectory.


  5. P2P payment mechanisms – including Zelle, Venmo or Apple Pay – have staked their claim as a go-to payment method. The number of credit union members who report using a P2P account as their primary payment method rose from 12% in 2023 to 25% in 2024. Overall use of accounts like Venmo and Zelle has increased by 21% among credit union members since 2021. It is clear that credit unions must prioritize investing in the integration of popular P2P services into their mobile banking platforms and overall payment solutions toolkit. This will help retain members and attract new ones


  6. Consumers continue to turn to newer payment offerings like buy now pay later (BNPL), while expressing interest in trending options like cryptocurrency. Eighty-two percent of credit union members who know their financial institution offers a BNPL program have utilized it, increasing from 69% in 2022. Additionally, more credit union members invested in cryptocurrency this year, up from 24% in 2023 to 39% in 2024, but they also indicate an increased interest in learning more about it from their financial institution, up from 30% in 2023 to 45% in 2024. Credit unions should continue to develop and expand their targeted communication campaigns to ensure members are aware of available BNPL programs and cryptocurrency, among others.

 

Generational Shifts

 

The Eye on Payments study paid particular attention to how different generations view payments. It found younger generations’ preferences experienced major shifts, continuing to set them apart from older consumers.

 

When it comes to their first preferred payment method, Gen Z, younger millennials (born between 1990 and 1996) and older millennials (born between 1984 and 1989) consumers all reported a shift from debit in 2023 to credit this year, while those ages 44 and up preferred debit. These younger generations also reported they tend to pay more with credit cards than they did a few years ago, up from more than 64% in 2023 to 81% in 2024. When it comes to purchase types, these younger consumers prefer credit across the board. The only transaction type in line with older generations was their preference for using cash for purchases under $10.

 

Younger millennials continue to use P2P payments most frequently. Younger consumers remain to as the most prolific users of mobile wallet technology, contactless cards, P2P payments and BNPL programs. Gen Z (12%) and younger millennial (10%) generations report mobile wallets are their most preferred payment method.

 

Millennials turn to contactless card technology the most, with more than half (56%) of younger millennials and older millennials (54%) tapping their contactless card at least a few times per week. The preferences and behaviors of younger generations will only continue to become more prominent and impactful to credit unions and the payments industry, meaning now is the time to review your credit union toolkit and offerings to ensure you are meeting these audiences with the tools they want.

 

What Should Credit Unions Do?


When it comes to tapping generational preferences the Eye on Payments recommended:

 

  • To effectively reach boomer consumers, credit unions should focus on providing a blend of traditional in-branch services and trusted digital tools to ensure these members feel supported and secure in their financial decisions.

  • Though their adoption of mobile wallets remains relatively infrequent compared to younger generations, Gen X has seen a slight increase in usage since 2023, signaling a steady shift toward more digital financial habits. Although mobile wallet usage among Gen X is growing, there’s room for further adoption. Credit unions can encourage the shift by educating members on integrating these digital tools into Gen X’s everyday financial routines, emphasizing that consumers can still use their preferred debit card within the mobile wallet.

  • Financially savvy and increasingly diversified in their approach to managing money, older millennials are leading the way in cryptocurrency adoption. A striking 72% of older millennial members report having invested in or currently holding cryptocurrency, significantly higher than the 43% of bank customers in the same age group. Credit unions should consider offering services or resources to support this interest. To support older millennials’ use of cash, credit unions should ensure their ATM networks are robust, easily accessible, and offer user-friendly features, such as quick cash deposit and withdrawal options.

  • Gen Z, younger millennials and older millennials reported a shift from debit in 2023 to credit this year, while those ages 44 and up preferred debit. “The preferences and behaviors of younger generations will only continue to become more prominent and impactful to credit unions and the payments industry, meaning now is the time to review your credit union toolkit and offerings to ensure you are meeting these audiences with the tools they want in the channels they frequent.”

 

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