Velera Payments Index: Consumers Spending, Despite Financial Strain
By Roy Urrico
The October 2026 edition of the Velera Payments Index highlighted the expanding role of digital wallets in everyday payments, continued strength in card-not-present spending and consumers’ increasing focus on essential purchases amid persistent inflationary pressures. This month’s Payments Index also included Velera’s quarterly metrics update, featuring credit card balances, delinquencies and digital wallet activity.
St. Petersburg, Fla.-based Velera, which describes itself as the nation’s premier payments CUSO, produces the Velera Payments Index to help credit unions and other financial institutions make strategic, data-informed decisions.
Key Takeaways:
Consumers continued to spend, despite financial pressure. Card spending delivered strong growth in September, with debit purchases surging 9.5% year over year and credit purchases rising 6%. The goods sector was a leading contributor to purchase growth for both payment types, while gasoline remained a key driver amid elevated fuel prices.
Essential spending remained the primary driver of card growth. Non-discretionary purchases outpaced discretionary spending for both credit and debit, with debit non-discretionary purchases rising 9.6% year over year versus 8.6% for discretionary. The gap was more pronounced for credit, with non-discretionary purchases up 6.7% compared with 2.8% for discretionary.
The labor market showed signs of moderation without a significant deterioration in employment conditions. Wage growth trailed inflation, and unemployment edged up to 4.2%, signaling easing labor market pressures. “However, September’s stronger-than-expected inflation data underscore that price pressures remain persistent…”
“The disconnect between consumer sentiment and spending continues to widen,” said Norm Patrick, Vice President of Payments and Deposits Consulting, Advisors Plus. “We continue to see a shift in how and where consumers spend, with everyday essentials accounting for a larger share of growth, while digital payment methods are becoming even more ingrained in daily life. As consumers look for value and convenience, credit unions have an opportunity to strengthen relationships by making sure their cards remain the preferred choice wherever members choose to pay.”
Economic Indictors
“September’s economic indicators highlighted a growing divergence between consumer sentiment and behavior,” the Index reported. “Despite weakening confidence, rising inflation and ongoing affordability concerns, consumers remained economically engaged, supported by strong spending activity and generally stable labor market conditions.”
Labor market data was mixed. The Bureau of Labor Statistics (BLS) reported nonfarm payroll growth of 29,000, “well below expectations of 84,000,” according to the Index reporting. The unemployment rate edged up to 4.2% from 4.1%, but remained within the narrow 4.1% to 4.3% range observed since March. Wage growth also moderated, with average hourly earnings rising 3% year over year, the slowest annual pace since May 2021. In contrast, the September ADP jobs report showed renewed momentum in private-sector hiring following three months of slower growth. Job growth from private employers defied expectations, with 90,000 additional jobs, up from August’s revised 36,000, while base pay increased 3.2% year over year.
Consumer confidence declined across key measures in September, as concerns about elevated prices and the economic outlook persisted. The University of Michigan Index of Consumer Sentiment fell to 48.1 from 51.7 in August, reaching its lowest level in four months. Assessments of both current and expected personal finances weakened, although buying conditions for durable goods improved modestly, as some consumers sought to avoid potentially higher future prices. Similarly, the Conference Board Consumer Confidence Index fell 6.7 points to 81.9, missing economists’ expectations and reaching its lowest level in more than a decade. Together, the declines point to a more cautious consumer backdrop heading into the final quarter of 2026, even as spending activity remains resilient.
September’s Consumer Price Index (CPI) report pointed to persistent inflationary pressures, with headline CPI increasing 0.6% month over month and 3.7% year over year, up from 3.4% in August. Core CPI, which excludes food and energy, rose 0.3% for the month and 2.6% year over year, indicating that while underlying inflation remains below headline levels, price pressures have yet to fully moderate. Although energy costs were a primary driver of the increase, the firmer-than-expected core reading suggests inflationary pressures are extending beyond traditionally volatile categories.
Breaking Down Spending
Credit card balances edged lower in September. The average balance decreased $8, or 0.26%, year over year to $2,951, while total credit card balances fell 0.9%.
Credit card delinquencies increased modestly in September, but remained in line with typical seasonal patterns and historical trends. The delinquency rate rose to 2.63%, up 9 basis points (3.5%) year over year. Delinquency rates remained higher among younger generations, led by Gen Z at 4.4% and millennials at 3.4%, compared with 2.4% for Gen X and 1.8% for Boomers.
Card-not-present (CNP) activity remained a key growth driver in September, with debit continuing to significantly outpace credit. Debit CNP transactions increased 17.4% year over year, while purchases rose 18.7%, reflecting the ongoing expansion in digital and online payment activity. Credit CNP transactions and purchases increased 7.7% and 6.7% year over year, respectively.
Contactless adoption continued to deepen, with contactless transactions accounting for 66% of credit and 70% of debit card-present transactions. “The higher penetration for debit suggests consumers are increasingly defaulting to tap-to-pay for routine, everyday purchases,” said the Index. Recent merchant acceptance expansions, including rollouts at Walmart and Sam’s Club, along with broader enablement across major retailers such as Home Depot, Kroger (including its regional banner brands) and H-E-B, may further support transaction growth.
Digital wallets are capturing a growing share of consumer payment activity, reflecting the shift toward digitally enabled payment methods. Debit remained the primary driver of digital wallet growth, with transactions increasing 41% year over year compared to 37% for credit.
ATM cash usage continued to trend lower, with ATM and point-of-sale cashback activity declining year over year. ATM withdrawals fell 1.8%, while the average withdrawal amount increased 3.7%, or $5.51, to $155.70.
What Credit Unions Should Do Now
The Velera Index recommended three opportunities for credit unions:
Strengthen Digital Wallet Positioning to Capture Everyday Spend. “As digital wallets account for a growing share of payment activity, securing top-of wallet status is becoming increasingly important for capturing everyday spend and deepening cardholder engagement. Credit unions should focus on driving digital wallet enrollment and usage through targeted marketing, cardholder education and wallet-friendly rewards strategies.”
Enhance Card Portfolio Performance with Post-Holiday Balance Transfers. “Post-holiday balance transfer campaigns can provide members with greater flexibility in managing high-interest debt, while supporting card portfolio performance. By initiating campaign development now, credit unions can ensure competitive low-rate offers are in market when members begin seeking relief from holiday debt, helping drive balance growth, retention, loyalty and interest income.”
Prevent Spend Migration Through Proactive Retention. “Consumers can shift everyday spending to other cards without closing an account, making declining card usage an important early indicator of potential spend migration. Predictive analytics can help credit unions identify changing behaviors and act sooner with personalized retention strategies.”
