Author: Shawna

CO-OP Payments Trends Report (Spending Data from May 1-31)

7/1/21 – The major payments trends of 2021 continued in May, with travel-related categories like lodging, camping and fuel showing a sustained upward swing alongside other hot segments like dining and home improvement. With more retail stores, dining establishments and other in-person experiences reopening as more people get vaccinated, consumers are eagerly embracing the return to pre-pandemic “normalcy” – escaping the confines of lockdown to pursue travel, shopping and other activities they missed over the last year. Credit unions should take advantage of these trends and prepare now for new payment portfolio growth opportunities.

Check out the trends in payments we’re watching this month:

#1: Travel, Dining, Home Improvement Lead May Payments Growth Trends

Over the past three months, those spending categories associated with in-person experiences, like dining/entertainment, lodging, travel and camping have all stayed hot, and have been joined by fuel and home improvement. Meanwhile, the big winners from the pandemic period, including bookstores (consisting largely of Amazon.com sales), digital goods, computers and office have cooled off.

#2: Rising Inflation Boosts Transaction Amounts and Interchange Income

For the first time since August 2008, inflation growth has topped 5 percent over a 12-month period. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in May on a seasonally adjusted basis after rising 0.8 percent in April.

The question is yet to be answered as to whether this recent inflation growth signals a long-term trend or just a short-term spike caused by temporary supply shortages in sectors like energy and used cars. Still, it’s a trend that warrants careful attention. For the moment, inflationary pressures are driving faster growth in average transaction amounts and monthly interchange, especially in debit.

#3: Debit Spend Paces Credit…For Now

Interestingly, debit spend has been growing faster than credit through the first half of 2021, particularly in non-traditional debit categories like lodging, where members are typically reluctant to have temporary holds placed on their checking accounts. One possible reason for debit’s dominance is that members’ deposit accounts have been flush with cash due to federal and state pandemic unemployment and stimulus payments. But despite this imbalance, CO-OP’s experts expect credit spend to catch up over the next few months.

“Credit is at the cusp of a run,” says John Patton, CO-OP Senior Payments Advisor. “People will start using credit for rewards again, and it will resurge this summer, in June and July. It will also be interesting to see how cardholders redeem their rewards points, if not for travel.”

“We will learn a lot in the coming months,” agrees Beth Phillips, CO-OP Director of Strategic Portfolio Growth. “Will the debit dominance persist? People have not had the influx of true cash since the stimulus payments ended. Have their mentalities and behaviors shifted?”

What CUs Should Do Now

Both Patton and Phillips say that now is the time for credit unions to prepare for strong payment portfolio growth, as consumers venture out of their homes in greater numbers to shop, dine and travel.

“With new stimulus money ending and employment picking up, credit unions should go back to the business of getting their members a card,” Patton says.

“With categories like gas, grocery and lodging all up, it’s a positive story,” Phillips adds. “It’s time to push your contactless usage and promotions in those categories.”

 Month-Over-Month Category-Level Spending (Comparing May 2021 to April 2021)

Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year), i.e., compares May 2021 with April 2021, rather than May 2021 and May 2020.

Amazon/Bookstores
Transaction Volume (#):
Credit: Down 10%. Debit: Down 5%.
Transaction Amount ($):
Credit: Down 10%. Debit: Down 6%.
Interchange ($):
Credit: Down 11%. Debit: Down 5%.

Digital Goods
Transaction Volume (#):
Credit: Down 7%. Debit: Up 1%.
Transaction Amount ($):
Credit: Down 8%. Debit: Down 1%.
Interchange ($):
Credit: Down 7%. Debit: Unchanged 0%.

Dining and Entertainment
Transaction Volume (#):
Credit: Down 2%. Debit: Up 5%.
Transaction Amount ($):
Credit: Up 2%. Debit: Up 9%.
Interchange ($):
Credit: Up 2%. Debit: Up 8%.

Education
Transaction Volume (#):
Credit: Down 5%. Debit: Down 2%.
Transaction Amount ($):
Credit: Up 3%. Debit: Up 2%.
Interchange ($):
Credit: Up 3%. Debit: Up 2%.

Gas
Transaction Volume (#):
Credit: Up 1%. Debit: Up 8%.
Transaction Amount ($):
Credit: Up 4%. Debit: Up 10%.
Interchange ($):
Credit: Up 5%. Debit: Up 9%.

Grocery
Transaction Volume (#):
Credit: Unchanged 0%. Debit: Up 7%.
Transaction Amount ($):
Credit: Unchanged 0%. Debit: Up 6%.
Interchange ($):
Credit: Unchanged 0%. Debit: Up 7%.

Lodging
Transaction Volume (#):
Credit: Up 2%. Debit: Up 8%.
Transaction Amount ($):
Credit: Up 3%. Debit: Up 6%.
Interchange ($):
Credit: Up 3%. Debit: Up 7%.

Medical
Transaction Volume (#):
Credit: Down 8%. Debit: Down 4%.
Transaction Amount ($):
Credit: Down 10%. Debit: Down 7%.
Interchange ($):
Credit: Down 10%. Debit: Down 7%.

Retail
Transaction Volume (#):
Credit: Down 2%. Debit: Up 3%.
Transaction Amount ($):
Credit: Down 4%. Debit: Up 1%.
Interchange ($):
Credit: Down 4%. Debit: Unchanged 0%.

Travel
Transaction Volume (#):
Credit: Up 4%. Debit: Up 9%.
Transaction Amount ($):
Credit: Up 7%. Debit: Up 7%.
Interchange ($):
Credit: Up 8%. Debit: Up 7%.

Computers
Transaction Volume (#):
Credit: Down 8%. Debit: Down 5%.
Transaction Amount ($):
Credit: Down 7%. Debit: Down 6%.
Interchange ($):
Credit: Down 7%. Debit: Down 5%.

Office
Transaction Volume (#):
Credit: Down 5%. Debit: Up 4%.
Transaction Amount ($):
Credit: Down 15%. Debit: Down 8%.
Interchange ($):
Credit: Down 13%. Debit: Down 9%.

Campers & Camping
Transaction Volume (#):
Credit: Up 4%. Debit: Up 19%.
Transaction Amount ($):
Credit: Down 7%. Debit: Up 5%.
Interchange ($):
Credit: Down 6%. Debit: Up 7%.

Home Improvement
Transaction Volume (#):
Credit: Up 5%. Debit: Up 12%.
Transaction Amount ($):
Credit: Up 2%. Debit: Up 8%.
Interchange ($):
Credit: Up 2%. Debit: Up 8%.

More information on the CO-OP SmartGrowth Consulting Team can be found here.

About CO-OP Financial Services

CO-OP Financial Services is a payments and financial technology company whose mission is ensuring the success of the credit union movement. CO-OP payments solutions, engagement services and strategic counsel help credit unions optimize member experiences to consistently provide seamless, personalized multi-channel offerings, while delivering secure, sophisticated fraud mitigation service. For more information, visit www.coop.org.

The Coastal bill payment service by Payrailz successfully goes live on the platform

6/23/21 – Constellation Digital Partners is pleased to announce Coastal Credit Union as the first credit union to officially launch digital services for its members through the Constellation platform. Coastal will now offer its members a modernized digital bill pay and person-to-person payments experience powered by Payrailz.

Benefits of utilizing Constellation’s platform include:

• Seamless integration of new member services within a credit union’s current digital banking solution
• Faster expansion of online and mobile banking services to fulfill a credit union’s digital strategy
• Agile integration of countless fintech innovations – comparable to big banks
• Delivering real world collaboration that benefit both credit unions and fintechs

Coastal’s launch of the services through the Constellation platform brings the partnership between the two organizations to fruition. Constellation founder and CEO Kristopher Kovacs served as the former CIO of Coastal and developed the Constellation concept for the open development platform during his tenure there.

Coastal President and CEO Chuck Purvis said, “This launch is historic not only for Coastal, but for the credit union industry as a whole, and we’re honored to be part of it. We’re committed to providing our members with top tier technology solutions, and Constellation enables our complete digital transformation. This launch is just the first step of Coastal’s journey on the Constellation platform.”

Constellation is making it possible for credit unions to better compete with big banks by providing a platform that is able to rapidly deliver the digital services members desire. The open, patented and secure platform enables credit unions to engage members in a way that’s never been possible before, powered by multiple providers through a single consolidated member portal.

“The vision for Constellation is being realized with Coastal’s launch,” said Constellation Founder and CEO Kristopher Kovacs. “We are delivering on our promise to build a futureproof digital banking experience for credit union members, as well as an innovation showcase for fintech collaboration.”

Constellation’s platform serves as a unique enabler between the fintech community and the credit union industry. The Constellation ecosystem offers a safe and reliable way for credit unions to harness the innovation of fintechs with confidence, while competing with the best digital services in the industry.

“Both Constellation and Payrailz have a shared vision of creating better experiences for credit union members. Our collaboration is a great example of how we deliver fintech integration that makes it simpler for credit unions to use our payment service,” said Payrailz CEO and Founder Fran Duggan. “The momentum is building with approximately a dozen more credit unions in the queue and eager to integrate Payrailz services using the Constellation platform.”

Other credit unions are slated to launch a variety of services, including full digital banking transformations, on the Constellation platform later this year.

Interested credit unions and fintech developers can request a platform demo, or inquire about Constellation’s services development process and investment opportunities, by visiting constellation.coop/contact-us.

To learn more about Constellation, visit www.constellation.coop. And, connect with Constellation on Twitter, Instagram (@ConstellationDP), Facebook and LinkedIn.

About Constellation Digital Partners, LLC:

Constellation has created the first open development platform dedicated to Credit Union and Fintech app development. This patented, secure, and flexible cloud-based ecosystem provides credit unions and innovative app developers the ideal platform to deliver safe, reliable, and next-generation digital financial service experiences. Credit unions now have the freedom to compete, innovate, and thrive in the financial services industry. First, by redefining what they offer, and second by delivering digital financial services in a way that places members squarely at the center of their business strategy. Visit www.constellation.coop to learn the latest innovations. Connect with Constellation on Twitter, Instagram (@ConstellationDP), Facebook and LinkedIn.

About Coastal Credit Union: 

Coastal Credit Union is a not-for-profit, member-owned, financial cooperative, offering a full range of financial products and services. Coastal was chartered on August 31, 1967 with the mission of fostering the credit union philosophy of “people helping people.”  Today, with $4.27 billion in assets, Coastal serves 286,000 members from 1,800 business partners and is among the leading financial institutions in North Carolina.  Coastal operates 23 locations in central North Carolina and serves members in all 50 states through a network of 5,000 shared branches, 30,000 surcharge-free ATMs, mobile banking featuring mobile check deposit, and a robust offering of online services at www.COASTAL24.com. For more Coastal news, visit our online newsroom.

About Payrailz®

Payrailz is a digital payments company offering advanced payment capabilities and experiences including consumer and business bill pay, external and internal transfers, new account funding, P2P, B2B, B2C and other related solutions to banks and credit unions. In a society that increasingly has become focused on a “do it for me” culture, Payrailz’ smart technology makes the difference. Payrailz creates smarter payment experiences for the financial services industry that are predictive and more engaging than currently available alternatives. Financial institutions can confidently embrace Payrailz’ API-first and cloud-native technology engine, to offer unique payment solutions to their consumers and businesses. Payrailz helps financial institutions meet the payment expectations of today and the payment innovation needs of tomorrow. For more information, visit payrailz.com, follow them on Twitter @Payrailz, Facebook or LinkedIn, or contact Mickey Goldwasser at 860.430.9245.

6/22/21 – As they “walked the walk” in their efforts to abide by the 7 Cooperative Principles, eDOC employees embarked on a 5-week step challenge, No Lazy Days in May, to help address community concerns over animal cruelty and shelter issues. The drive ended on June 5 with a total group effort of 6.4 million steps, or about 3,176 miles, raising $500 for the Homeward Bound, Vermont’s Addison County Humane Society.

Ramon Cano, a perennial top-3 achiever of previous drives and a winner in 2016, topped the event with 689,912 steps and garnered the top honors. He was followed closely by Dillan Fierro with 645,546 steps and Karl Johnson, at 498,124 steps. Jody Snow, who helped organize the drive felt the event was a perfect activity to break the doldrums imposed upon by the pandemic. “It’s a great start to becoming physically active again, as societal restrictions ease, and a great way to support our community in the process,” said Snow.

Homeward Bound is an independent open admission shelter dedicated to protecting the wellbeing of homeless, abandoned and abused/ neglected animal. They serve an average 900 animals per year, making a difference in the lives of so many animals.

About eDOC Innovations, Inc.

eDOC Innovations is the nationwide leader in mobile enterprise digital transaction management and e-commerce software for credit unions. For almost 30 years, eDOC Innovations has been designing solutions to reduce overhead, increase operational efficiency, and provide convenience to members. eDOC Innovations’ products include solutions for remote mobile and in-branch closings, mobile e-signature processing, digital asset lifecycle management, intelligent and interactive form automation, mobile remote deposit capture, electronic statements, and more. To learn more about our technology, visit www.edoclogic.com or give us a call at 800-425-7766 option 3.

6/18/21 – CU*Answers, a 100% credit union-owned CUSO, held their 2021 Annual Leadership Conference and Stockholders Meeting on June 16^th at the JW Marriott Hotel in downtown Grand Rapids, Michigan. The event brought together credit union leadership from across the country for a briefing on the organization’s overall direction and major projects for the coming year.

This year’s conference theme was “Experienced, Energized, and Engaged.” CU*Answers CEO Randy Karnes introduced the theme to a crowd of nearly 250 participants from credit unions and vendors from around the country. In his opening remarks, Karnes said, “The experience of COVID-19 will likely define a generation of business people who survived this trial, forever changed by balancing the goals of an industry and the plight of the customer-owners who define it. After we take stock of what it means to go on from here, I can’t imagine a generation more energized to engage communities of people, their dreams, and a future based on everyone’s success.”

Karnes continued, “We have the resumes to change it all. We have the energy to see it through, and we have the passion to inspire our entire industry. The party has started, and our party has just the right crowd of people to keep it going and make it a success for the next decade and beyond.”

The day-long conference was attended by 156 leaders from 69 credit unions, along with 42 representatives from 30 vendors and 47 internal staff. Other topics included, “Launching in 2021: A Decade of Evolution Ahead,” “When it comes to lending, where will CU*BASE focus in the next couple of years?,” and “Setting a target beyond your members might be exactly what your members need.”

At a separate session that evening, CU*Answers Stockholders met for the annual board member election and to hear a recap of the CUSO’s financial position and projections for the fiscal year. Three credit union CEOs were chosen by their peers to serve a three-year term on the CUSO’s Board of Directors, during elections held at the 2021 Annual Stockholders meeting held on Wednesday, June 16, 2021. Incumbents Tom Gryp, CEO of Notre Dame Federal Credit Union in Notre Dame, Indiana; Kris Lewis, CEO of Allegan Credit Union in Allegan, Michigan; and Scott McFarland, CEO of Honor Credit Union in St. Joseph, Michigan, will all serve another a three-year term on the CU*Answers Board of Directors beginning this October.

About CU*Answers, Inc.

CU*Answers offers expertise in implementing technical solutions to operational needs, and is a leader in helping credit unions form strategic alliances and partnerships. CU*Answers provides a wide variety of services for credit unions including its flagship CU*BASE^® processing system (online and in-house) and Internet development services featuring It’s Me 247 online and mobile banking. Additional services include web development, network design and security, and image check processing. Founded in 1970, CU*Answers is a 100% credit union-owned cooperative CUSO providing services to credit unions representing over 2 million members and $21.5 billion in credit union assets. For more information, visit www.cuanswers.com.

PSCU – the nation’s premier payments credit union service organization (CUSO) – published the June 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.

In this month’s iteration, PSCU focuses on the various factors impacting the payments industry that indicate signs of an accelerated economic rebound. With the CDC updating its travel guidance and relaxing guidelines on social distancing and activities for fully vaccinated Americans, consumer comfort levels continue to increase as domestic travel bookings and event attendance are on the rise. The study looks at the impact of these forces and takes a deep dive into one of the sectors hit hardest during the coronavirus pandemic: Entertainment.

“In this month’s PSCU Payments Index, consumer spending continues to show signs of quickly rebounding, with strong growth rates in May for both debit and credit,” said Brian Scott, SVP, Chief Growth Officer at PSCU. “Fueled with extra money in savings and lower household debt balances, consumers are poised to emerge from the economic downturn far better than economists originally anticipated. Yet with this fast recovery from the pandemic-induced recession, demand is bouncing back faster than supply can keep up – causing shortages and inflationary risk. At the same time, signs of pent-up ‘revenge’ spending continue as consumers increase discretionary spending on larger purchases. In this month’s Deep Dive, we explore the Entertainment sector, where debit and credit purchases exceeded 2019 levels for the first time.”

A sampling of key takeaways from the June report includes:

• While May CPI-U jumped to an annual rate of 5.0%, its largest increase since 2008, the Federal Reserve is now expecting to raise interest rates during 2023 (versus after 2023). The Fed’s 2021 inflation forecast has also increased by a whole percentage point to 3.4%.
• Growth in card payments remains strong, with the Entertainment sector (this month’s Deep Dive) returning close to 2019 levels
• With COVID-related restrictions easing, in-person attendance at major sporting events, amusement parks and other events is on the rise, signaling a return to pre-pandemic levels
• As consumer comfort levels with in-store purchases increase, Card Present volume continues to improve – but still significantly trails Card Not Present growth
• Credit card account balances posted a modest improvement in May
• Gasoline purchases are up compared to 2019 levels, fueled by both higher prices at the pump and increased demand as crude oil hit $70 per barrel for the first time in three years

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.

Let us know of any questions or additional needs, or if you’d like to coordinate an interview.

Peyton Burgess
On behalf of PSCU
919-815-2915