Velera Report Reveals Increase in Credit Card and Digital Payments Usage Amid Security Concerns

Seventh annual “Eye on Payments” study focuses on evolving payment preferences and behaviors among U.S. consumers

Velera – formerly PSCU/Co-op Solutions, has announced the release of its 2024 Eye on Payments study. The seventh annual report gauges payment preferences and behaviors among credit union members and other financial institution customers (“non-members”), examining how they have shifted and evolved within the past 12 months and recent years.

This year’s study found that consumers are reporting they prefer credit over debit when it comes to their preferred top-of-wallet payment method. This represents a notable shift that extended into changes among payment preferences for certain types of purchases and situations, as well as an increase in credit card applications. The rise of credit cards is coupled with consumers turning more frequently toward payment options like mobile wallets and person-to-person (P2P) payment accounts, with some consumers even claiming these as their primary methods of payment.

The 2024 report also revealed that younger generations’ preferences and behaviors are driving a majority of these trends, including what offerings are growing in popularity and usage in the payments landscape.  Not surprisingly, younger generations prefer credit cards and are also the most prolific users of mobile wallet technology, contactless cards, P2P payment accounts and Buy Now, Pay Later (BNPL) programs.

Not only are consumers leaning more heavily into credit and digital payments options, but security is top of mind, impacting how most consumers choose with which method to pay. Velera’s Eye on Payments has been tracking an increase in reported fraud incidents since 2021: This year, 10% of credit union members experienced identity theft and 14% reported they were victims of card fraud, compared to just 4% and 8% in 2021, respectively. Similarly, eight in 10 (82%) credit union members report they make decisions about how to pay for something based on which is the most secure, up from 73% in 2023.

“Through this annual research, Velera aims to determine the factors that influence consumer payments preferences and behaviors to help credit unions make informed, strategic decisions. Each year, this becomes increasingly difficult as credit unions are not only faced with keeping pace with the rapidly evolving payments industry and competitors, but also addressing larger challenges such as an uncertain economic outlook and ongoing inflationary pressures, among others,” said Velera Chief Marketing & Communications Officer Tom Pierce.

“The 2024 Eye on Payments study makes it clear that the payments industry is resilient, and that opportunities for credit unions to succeed and grow are plentiful. Whether it is enhancing member experiences or investing in mobile and digital solutions, we believe the key findings and takeaways from Eye on Payments can help credit unions earn the top of wallet and mind spot among current members, while sparking interest from other consumers and non-credit union members alike,” Pierce said.

Other key findings from the study include:

• Although there was a shift in overall preference, debit remains a close second with 35% of consumers reporting it as their preferred payment option. Cash has also maintained a steady place in consumers' wallets with 16% of consumers saying cash is their first pick.

• More than one-quarter of credit union members (26%) use an ATM at least a few times a week, and most report cash withdrawals as the reason (70%).

• More than half of credit union members (55%) say that card design – ranging from type of card material to whether it is produced sustainably, among other attributes – influences which card they choose to use, up from 39% in 2023.

• Fifty percent (50%) 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.

• Person-to-person (P2P) accounts have also become more mainstream, with the number of credit union members who report using a P2P account as their primary payment method rising from 12% in 2023 to 25% in 2024.

• Eight in 10 (82%) credit union members who know their financial institution offers a BNPL program have utilized it, increasing from 69% in 2022. At the same time, interest in utilizing a BNPL offering from a financial institution remains steady (32% in 2024, 33% in 2023 and 31% in 2021).

• Not only have 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.

In addition to taking a more in-depth look at these key findings, the study also analyzes how and why payment method preferences differ among the generations, as well as key takeaways credit unions can implement to better meet member payment preferences and needs in key opportunity areas.

Velera surveyed 1,850 credit union members and non-members from across the U.S. The online survey, conducted in June and July 2024, was taken by participants ages 18 to 65+. Of those surveyed, 43% were male and 57% were female, and demographic characteristics of those surveyed align with consumer data from America's Credit Unions Member Profile. Generations were defined as: Generation Z, ages 18-27; Younger Millennials, ages 28-35; Older Millennials, ages 36-43; Generation X, ages 44-59; Baby Boomers (Boomers+), ages 60 and above.

The 2024 Eye on Payments white paper is available for download on the Velera website.