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2022 Eye on payments: Part V — five-year trends highlight changes in the approach to payments

For the past five years, PSCU has set out to gauge the state of payment preferences among credit union members and other financial institution customers (“non-members”) through annual research. Each year, PSCU has explored the factors influencing consumers when it comes to their choice and usage of different payment methods – and how these factors may vary among different life stages and economic events. The results of the study each year also led to key takeaways for credit unions to consider when making decisions and optimizing offerings.

When results of the 2022 Eye on Payments study are compared to the 2018 Eye on Payments study, the five-year trends reveal changes in the ways members approach payments. We explore some takeaways of these five-year trends in this final installment of our five-part blog series from our 2022 study.

Choice and Convenience Influence Payment Methods

When we first started to conduct this annual research, mobile payments were in their infancy – and not yet widely adopted by over half the population. In 2018, the percentage of credit union members that prefer using mobile wallets remained low, despite their fast transactions (12%), convenience (11%) and ease-of-use (10%).

Then, the popularity of digital payments — like mobile wallets — rapidly accelerated during the COVID-19 pandemic, which occurred two years into our annual research.

Fast forward to today, and the number of members reporting a mobile wallet as their most preferred way to pay has tripled since 2018. Four in 10 also reported they were likely to use a mobile wallet to pay for goods or services in the next six months. Millennials are the most proficient users of mobile wallets, turning to this payment type on a monthly (31%) and weekly basis (21%).

When asked what payment methods respondents would be likely to use in the next six months, 83% said debit card, 77% said credit card, 54% said digital payment solutions, 38% said mobile wallet and 38% said a store-specific payment app. More than half of respondents planned to use a digital payment solution like Venmo, Zelle or PayPal in the next six months. Digital payment solutions, like mobile wallets, are here to stay.

Debit Is Preferred, but Credit is Actually Still King

In 2018, credit was the preferred payment method, with 61% of respondents reporting being the most comfortable using credit cards across the majority of retail purchase locations, and 60% claimed credit cards were more convenient to use than other options. Debit cards were a close second preferred payment method, especially at routine retail locations for small purchases.

The 2022 study revealed, for the fourth year in a row, that debit remains the overall preferred way to pay – with credit union members favoring debit cards (46%) slightly more than non-members (42%). Moreover, debit cards are the clear payment choice for every purchase type, ranging from full-service restaurants to local retailers, pharmacies, grocery stores and more. This shift could be attributed to members more conscious of their budgeting and spending habits due to the uncertain economy.

Yet, 2022 data shows there is a difference between what members are reporting as their preferred payment method compared to what they are actually using. While debit may be the preferred way to pay, when asked what type of payment method respondents had actually used in the past 60 days for in-store purchases of any kind, the same percentage of respondents (68%) report using debit and/or cash, followed closely by credit at 63%. When asked what payment method they are most likely to use in the next six months, nearly the same percentage reported they would turn to credit (76%) as debit (80%). Could this be a result of financially strapped members having to pay via credit for purchases they would not be able to afford otherwise? Given the current economic climate, credit unions should consider offering more financial wellness education to members.

Additionally, all respondents report they turn to credit cards for major purchases and cash when paying for services or purchases under $10 — trends that have remained consistent since 2018.

Emerging Payments

The first form of cryptocurrency, Bitcoin, was created and launched in 2009, with the coin’s mysterious creator originally revealing the blockchain system that would be the backbone of the cryptocurrency market in 2008. Yet, cryptocurrency only really took off among the general public in past couple of years. As such, PSCU does not have data on cryptocurrency and such emerging payments in the 2018 study.

In the 2022 study, respondents report interest in cryptocurrency, with 26% saying they are likely or extremely likely to use cryptocurrency as a method of payment as more merchants begin accepting it. At this time, Millennials are investing or holding cryptocurrency more than other generations. While the payments space is currently in a crypto winter – with further uncertainty brought about by the recent collapses of Silicon Valley Bank and others concentrated in this space –  cryptocurrency, NFTs and the metaverse look like they are here to stay.

It will be interesting to see what shifts in payments will occur five years from now. Regardless of the shift in expectations, it is important for credit unions to be mindful of how those trends are reflected amongst your own members. For example, respondents continue to be concerned about privacy and security. It is important to inform members on what your credit union is doing to protect them, while at the same time educating members on how they can protect themselves, especially with emerging payments technology.

By focusing on their preferences, you will be able to better fuel your members’ financial health and success, meeting their expectations and providing the personalized service your credit union is known for. Discover more key findings, takeaways and five-year trends by downloading the full 2022 Eye on Payments study now.

In his role as Chief Marketing Officer, Tom Pierce is responsible for leading and executing PSCU’s marketing and communications strategy, including brand development and sentiment, public relations, go-to-market strategy, market research and events. Pierce has successfully led marketing teams for more than 30 years, with the latter half of his career spent in the payments industry. Prior to joining PSCU, Pierce served as Chief Marketing Officer for Cardtronics, the largest global ATM operator, and held senior marketing roles at FIS, Metavante and Wausau Financial Systems.

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Credit unions well-positioned to enter BNPL market

Over the past few years, the evolution in consumer spending behaviors has been a catalyst for payments innovation. From P2P to mobile wallets, and contactless to buy online/pickup in store (BOPIS), consumers have been open to trying new methods and forms of payment to attain greater convenience, less friction and more financial security and flexibility.

Buy now, pay later (BNPL) is one major trend that recently emerged and grew exponentially during the pandemic, meeting consumers’ desire for greater convenience and flexibility in how they manage their overall budgets. BNPL solutions give consumers the option of spreading payments on purchases across several months.

It’s gotten to where consumers expect their financial institutions and card issuers to offer BNPL, or they will find it elsewhere with a fintech or another bank. To remain competitive and relevant to their members’ daily financial lives, credit unions must embrace innovation in digital payments and lending, and BNPL is one important piece of that equation.

What is happening with BNPL?

BNPL enjoyed massive growth in 2022, adding a reported 28 million new users over 2021. But some foresee a bumpy road ahead for the BNPL market in 2023.

Although the industry is projected to continue its strong growth trend with a projected CAGR of 33.3% through 2026, fintech providers like Affirm, Klarna and Zip have yet to demonstrate profitability.

Moreover, the tendency of these fintechs to play fast and loose with regulations is resulting in bad publicity—as well as actual losses as customers overextend themselves on purchases during a period of economic uncertainty.

“For the customer, using fintech BNPL providers like Affirm and Klarna is introducing yet another financial institution into the mix, one where they don’t have a past relationship or experience to lean on,” said Rob Navarro, Director of Product Development, Co-op Solutions. “It becomes even harder for customers to manage their holistic financial picture, and where we might be seeing an increase in defaults or overextension. Using a BNPL solution through their trusted credit union can help alleviate that and also provide a better member experience for the user.”

The Consumer Financial Protection Bureau (CFPB) has taken notice of the rapid growth of BNPL programs, with an eye on addressing “uneven disclosures and protections,” along with “data harvesting … debt accumulation and overextension.”

“Credit unions are in an enviable position,” Navarro says, “as they are able not only to better assess the risk profiles of their members, but also help them manage their financial picture more effectively than the competition.”

According to PaymentsDive, installment payment providers like Affirm, Klarna, Afterpay and Sezzle are already tightening up their underwriting standards as consumers face inflationary pressures and losses begin to mount. But startup fintechs aren’t the only competitors in the BNPL space. More established firms like Amazon and Apple are rolling out their own versions of BNPL incorporated into their proprietary digital wallets, providing consumers with more options than ever before.

BNPL is part of a long-term shift in payments

We are witnessing a fundamental change in consumer behavior. Borrowing is moving closer to the point of sale and is becoming inextricably linked with the payment experience. This is why BNPL is resonating with so many—people want to be able to purchase the items they want, whenever and however they want.

This desire is fueling a convergence of lending and payments, with the eventual result being that the traditional personal loan may decline to the point of no longer being offered. For credit unions, this convergence is also driving a new definition of trust that is split between the traditional understanding that is exemplified by “character,” and trust as defined by “capabilities.”

Whereas credit unions have long succeeded in character-based trust aspects like providing outstanding member service and consultative advice, the winners of this new financial revolution will need to both be able to deliver the right digital capabilities to meet evolving consumer needs, while responding quickly to such changing needs through continuous innovation and agility.

Above all, credit unions need to offer innovative payment solutions that support their members’ daily interactions. If not, credit unions will lose the long-term relationships that have been built on legacy products like checking accounts, auto loans and mortgages.

BNPL-type programs are one way credit unions can drive innovation and meet members where they are today. They also serve as an evolution of the traditional personal loan, which is losing favor in today’s marketplace.

Credit unions are well-positioned to offer their own version of BNPL, but with the “credit union difference.” They know their members intimately and can offer solutions that fit their unique needs, with benefits catered to credit unions. Moreover, the installment-loan characteristics of pay over time programs make them a less risky option for lenders than open lines of credit that allow borrowers to carry balances in perpetuity. For a credit union member, participating in a well-designed BNPL program at your home credit union means you are essentially “borrowing from yourself.”

Co-op Pay-Over-Time Transactions—BNPL designed for credit unions

To meet this market need, Co-op has been busy developing Pay-Over-Time Transactions, a solution that empowers members with the control and flexibility to pay for select transactions over time, giving them peace of mind in support of their lifestyle and their financial wellness needs.

Built by Co-op exclusively for credit unions, based on input and feedback from the Co-Creation Councils, industry partners, and a Client Task Force, Pay-Over-Time Transactions offers unmatched configurability to enable credit unions to align lending risk profiles and customize the program for their specific needs. This will help to reduce the risk of delinquent payments and default, while providing members with the immediate access to create flexible payment plans for transactions that have recently posted on their credit card account.

Pay-Over-Time Transactions expands the value of payments, the most common and frequent interaction members will have with their credit union. As part of Co-op’s credit union digital ecosystem, this solution will support credit unions in their quest to acquire and retain members by offering a convenient new tool in support of their daily interactions and financial wellness needs.

Many credit unions have already signed up for Pay-Over-Time Transactions in anticipation of its release. Is your credit union ready to join them?

Co-op Pay-Over-Time Transactions is an important component of the full-service digital payments program designed for the future. For more information on this and other innovative digital payment solutions, contact your Co-op Business Executive, call 800.782.9042, or email

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Co-op announces two new keynote speakers for THINK 23, plans to unveil 2023 CU and consumer growth strategy research

Linda Kirkpatrick and Steve Wunker Added to Conference’s Main Stage Line-up

March 22, 2023 – Co-op Solutions is announcing two new keynote speakers for its THINK 23 conference, adding to its line-up of world-class thought leaders on the payments industry, digital transformation and consumer behavior.

“The theme for THINK 23 is ‘The Invisible Revolution,’ a revolution in how people are moving money that includes digital solutions, banking as a service and embedded finance,” said Samantha Paxson, Chief Experience Officer for Co-op. “These payment trends have created profound transformational opportunities for credit unions that our keynote speakers will help us address with their unique perspectives on human-centered technology.”

“In addition, Co-op will unveil the results of its 2023 market research performed in conjunction with EY and Mastercard, to help leaders better understand the psychology behind consumer spending and saving, and to help grow member utilization, preference and trust with credit unions to manage both their daily and long-term financial lives,” said Paxson.

The THINK 23 conference will be held May 2-4, 2023, at the JW Marriott/Starr Pass Resort in Tucson, Arizona. Credit union attendees can register immediately at

Kirkpatrick and Wunker Join Previously Announced McKelvey and Shevlin

Co-op had previously announced Jim McKelvey, co-founder of Block, Inc. (formerly Square, Inc.), and Ron Shevlin, Chief Research Officer at Cornerstone Advisors, as THINK 23 keynote speakers. Joining them are:

Linda Kirkpatrick. Kirkpatrick is President of North America for Mastercard, and leads the company’s largest market. She has responsibility for customer relationships and operational activities across the U.S. and Canada. Kirkpatrick began her career with Mastercard more than 25 years ago, and has been part of its evolution from a not-for-profit association to a global leader in payments innovation and technology.

Steve Wunker. Wunker is the Managing Director of New Markets Advisors, which he founded in 2009, and advises companies such as Barclays, First National Bank of Omaha, Progressive Insurance and Microsoft. His books include “Jobs to be Done: A Roadmap for Customer-Centered Innovation” (2016) and “Costovation: Innovation That Gives Your Customers Exactly What They Want – And Nothing More” (2018).

Research Studies Long-Term Financial Wellness as a Growth Strategy and New Member-Centric Model

In 2021 and 2022, Co-op Solutions made a commitment to conduct extensive research on behalf of its clients, to help the credit union movement navigate sea changes in the market brought on by the digital transformation of payment systems. The company’s most recent research report is “Building the New Member-Centricity,” which can be found here.

Co-op will share the results of its 2023 research during THINK 23, along with study partners EY and Mastercard. The data and conclusions will inform much of the THINK 23 content, with breakout sessions enabling deeper dives into the findings.

“Our 2023 research explores the gap that exists between micro, daily payment interactions and long-term financial wellness,” said Paxson. “There is a direct correlation between short-term financial management constraints and achievement of long-term spending and saving goals across all demographics. This is a key issue for credit unions not only as socially responsible financial services providers, but as organizations that seek to prosper and grow in the long-term in a highly competitive and converging marketplace. We also see opportunities for credit unions to differentiate, drive growth and reclaim trust by winning the primary financial interaction moment-by-moment.”

For more information and to register immediately, visit

About Co-op Solutions

Co-op Solutions is the market-leading financial technology platform whose mission is to connect credit unions to the technology, strategic partnership and scale they need to best serve their members now and into the future. Co-op partners with credit unions to unlock their potential so they can compete; does the hard work of innovation, creating a one-stop opportunity to help credit unions grow; and offers knowledge and expertise in a world where everything must be integrated. For more information, visit


Bill Prichard, APR, Director, Public Relations
Co-op Solutions
(909) 532-9416

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PSCU Payments Index – March 2023 Edition

March 16, 2023 – PSCU – the nation’s premier payments CUSO and an integrated financial technology solutions provider – published the March edition of the PSCU Payments Index, the goal of which is to provide information and insights to help financial institutions make informed, strategic decisions on the road ahead.

Trends in consumer purchasing are beginning to show early signs that we are on a path of the soft landing the Fed has been working toward. In our February 2023 data, we find consumer purchasing, while still positive for credit and debit cards, in mid-single-digit growth.

In the Labor Department’s March 14 update, the Consumer Price Index (CPI) declined by 0.4% for the month of February, bringing the 12-month rate of inflation to 6.0%. The largest contributor, accounting for 70% of the increase, was shelter, with food, recreation, and household furnishings and operations also contributing. The Bureau of Labor Statistics (BLS) reported in its February 2023 jobs report that 311,000 jobs were added for the month, with leisure and hospitality, retail trade, government and health care jobs showing notable gains. The overall unemployment rate for February finished at 3.6% or 5.9 million people.

The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures price index (PCE), increased in January to 5.4%. The Federal Reserve’s next meeting occurs on March 21-22, where a quarter-point rate increase was originally expected; however, some analysts are now predicting no rate increase following the recent collapses of Silicon Valley Bank, Signature Bank and Silvergate Bank. While these recent banking collapses appear to have little impact on the credit union system, we will continue to monitor as the situation evolves.

The Consumer Confidence Index decreased in February to 102.9 (1985=100). The decrease in February reflected large drops in confidence for households aged 35 to 54 and households earning $35,000 or more. The Expectations Index fell further to 69.7, which is notable as the Conference Board has indicated that, when below 80, it would often signal a recession in the next year. The national average price per gallon of gasoline finished at $3.46 for the week ending Mar. 13, down 20% year over year.

In the March 2023 edition of the PSCU Payments Index, February’s growth rates for transactions and purchases continue to converge for both credit and debit in the mid-single digit range. In this month’s Deep Dive, we look at two sectors with the highest year-over-year growth in purchases: Travel (discretionary spending) and Transportation (non-discretionary spending).

“While overall consumer spending growth remains positive, it continues to trend in single-digit growth ranges,” said Yvonne Stelpflug, SVP, Advisors Plus at PSCU. “As discretionary and non-discretionary spending remains moderate, in this month’s Deep Dive we explore the two sectors experiencing the highest year-over-year growth in Travel and Transportation. After declines amid the pandemic, the travel industry continues its positive recovery with cruise lines and international air travel leading the largest growth. In the non-discretionary Transportation sector, growth in mass transportation is seeing the largest increases as a result of more employees returning to the physical workspace.”

A sampling of key takeaways from the March report includes:

The full report is available for download here or can be shared as a PDF upon request. Additionally, feel free to subscribe here to receive updates when the PSCU Payments Index is published each month.

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February Spending Trends: Opportunities to revive and engage

CO-OP Solutions Payments Trends Report (Spending Data from February 1-28)

March 15, 2023 – Uneasiness about the current economy continued as most spending categories were off significantly from not only the holiday shopping season, but January’s more modest results as well.

It seems that consumers are still waiting for the other shoe to drop, as strong underlying economic reports belie the widespread belief that a recession is just around the corner.

The early returns on February’s jobs data is encouraging, with ADP showing 242,000 private payroll jobs added, a strong increase over January’s 106,000 growth figure. February CPI index data is not expected to be released until mid-March, but inflation held steady in January at a rate of 6.4% over the last 12 months.

All major stock market indexes tumbled by more than 1% in the wake of Fed Chairman Jerome Powell’s recent comments, in which he fretted over stubborn inflation and the still-hot economy, indicating the Fed would consider more aggressive rate hikes this year if needed. Market watchers are predicting the Fed will raise interest rates by another 50 basis points at its next meeting on March 22.

Overall, Co-op spending data reports that February 2023 transaction volume was higher across both the debit and credit portfolios versus February 2022.

Co-op’s SmartGrowth consultants areclosely watching the following key spending trends this month:

1. Back to basics: Co-op’s February month-over-month data shows that consumers are tightening their wallets and hunting for bargains. While higher-end retail categories like Department Stores and Specialty Retail – which includes items like florists, antiques, and jewelry – fell by double digits in February, Discount Stores and Wholesale Grocery declined much more modestly (3-4%).

Moreover, Home Improvement, a high-flier during the pandemic, fell again in February after a precipitous drop in January. This continued downward trend coincides with the period when consumers typically begin to think about investing in home renovations and “sprucing up” in early spring.

Co-op’s data is backed up by national trends, as both Walmart and Home Depot recently warned of profit pressures as high inflation motivates consumers to focus on everyday needs like groceries at the expense of luxuries like home improvement goods. Meanwhile, popular discounter T.J. Maxx has seen a 5% increase in sales as economic uncertainty drives shoppers to the bargain bin for clothing.

2. Amazon volume slides: The biggest month over month declines in Co-op’s February portfolio data were seen in the Amazon/Bookstores category, which fell by -41.7% in debit and -23.9% in credit, off of similar large declines in January.

“Despite the recent month-over-month softness in transaction volume, year-over-year Amazon is still up over 15%,” said Beth Phillips, Director, Co-op Solutions. “There is this narrative that consumers are waiting for a recession that hasn’t yet arrived, so they are naturally being more cautious with their spending. As consumers focus more on their immediate needs, they are taking a break from their online shopping habits.”

3. Credit balances slip slightly: Following a year of steadily growing credit portfolio balances, Co-op data showed a modest drop of -0.29% in February 2023, following a -1.53% drop in January. Despite this, credit balances as of February 28, 2023, were still up by 14.42% over February 2022.

According to data from the New York Fed, credit card balances reached $986 billion in the fourth quarter of 2022, a record high. In addition, the percentage of credit card users making payments 30 days late rose to 5.9%, from 5.2% in the prior quarter.

“The fact is, consumers – and particularly younger consumers – are feeling increasingly stressed financially,” said John Patton, Co-op Senior Payments Advisor. “Despite a resilient job market, the pressure of high rates, inflation and the depletion of pandemic-era stimulus funds have left families’ cash reserves at their lowest level in years.“

Year-Over-Year Category Level Spending (Comparing February 2022 to February 2023)

% Difference from Feb’22 vs Feb’23 YoYDebitCredit 
Category# Transactions YOYTrans Amt YOYInterchange YOY# Transactions YOYTrans Amt YOYInterchange YOY 
Books, Periodicals and Newspapers -2.0%-7.2%-2.6%0.3%-6.3%-8.7% 
Campers & Camping-13.6%-7.4%-5.9%-8.6%-3.5%-4.0% 
Campers & Camping-13.0%0.2%-0.8%-8.7%1.5%0.7% 
Mobile Home Dealers-15.5%-18.1%-16.6%-8.3%-9.8%-10.2% 
Digital Goods16.0%16.9%19.3%20.5%20.3%16.9% 
Dining & Entertainment4.7%10.5%9.5%6.8%11.9%8.2% 
Fast food, Restaurants, Bars3.6%7.0%7.6%6.1%10.2%6.5% 
Home Improvement-7.8%-9.2%-9.5%-4.7%-3.9%-3.4% 
Auto Dealers/Services/Parts-4.0%0.8%-1.2%-2.0%7.0%6.8% 
Cable, Satellite and Other0.0%0.7%2.0%3.6%3.2%4.4% 
Courier/Delivery Services-9.6%-5.6%-8.4%-5.8%-4.5%-7.1% 
Professional Services3.3%5.1%0.5%2.4%5.3%3.1% 
Real Estate12.9%22.1%29.2%18.6%25.4%19.1% 
Subscription services-10.9%-5.1%-13.2%-6.6%-1.3%-5.5% 
Department Stores-7.4%-8.0%-7.2%-5.3%-5.2%-7.2% 
Discount Stores 11.1%17.7%16.1%13.5%21.0%26.4% 
Specialty Retail-11.6%-2.0%-8.8%-11.0%-2.1%-2.5% 
Florists, antiques, jewelers, cigars, stamps, etc.-11.6%-2.0%-8.8%-11.0%-2.1%-2.5% 
Golf courses-4.0%1.9%2.9%-3.5%0.1%-3.8% 
Auto Rental-3.7%-2.1%-2.9%6.7%8.5%3.6% 
Other Travel (railroad, taxi, cruise lines, toll fees, etc.)10.1%29.7%27.6%24.7%52.6%49.2%
5999 Retail4.4%3.9%5.7%8.5%4.5%1.5%
Grand Total2.6%3.8%3.5%4.8%6.6%6.5%

What Credit Unions Should Do Now

As we move deeper into 2023, credit unions must simultaneously navigate an uncertain economic environment, while also fending off market disruptions like BNPL and digital wallets.

“Credit unions need to focus on the increasing diversification of consumers in terms of lifestyle behaviors, employment and the payment lending tools they have at their disposal,” said Phillips. “To prepare for the continuous disruption to come, you must establish your credit union as your members’ primary choice for their everyday financial needs, which begins with payments. Once you are their go-to resource for daily financial behaviors, they will think of you first when it’s time to get an auto loan or mortgage.”

To have success in the competitive payments space, credit unions need to think differently. This means offering a competitive rewards program, with cash-back being top of the list in a recessionary environment. It also means conducting more sophisticated data analysis on members’ spending behaviors in order to effectively curate product offerings to their specific needs.

It also means investing now in payment products and digital offerings. Credit unions should seek out niche micro markets within their membership – like small business owners or recent college grads – and design customized payment and lending products just for them. For example, institutions may offer a business rewards card targeted to entrepreneurs, or a secured card to help young members build their credit.

“This needs to be more than a simple card campaign,” said Phillips. “Credit unions must adopt a strategic mindset shift, where your payments program is deployed to capture your members’ everyday spending behaviors, and then drive them toward your lucrative loan generation channels.”

More information on the Co-op SmartGrowth Consulting Team can be found here.

About Co-op Solutions

Co-op Solutions is the market-leading financial technology platform whose mission is to connect credit unions to the technology, strategic partnership and scale they need to best serve their members now and into the future. Co-op partners with credit unions to unlock their potential so they can compete; does the hard work of innovation, creating a one-stop opportunity to help credit unions grow; and offers knowledge and expertise in a world where everything must be integrated. For more information, visit

Bill Prichard, APR, Dir., P.R.
Co-op Solutions
(909) 532-9416