Velera just dropped their September 2026 Payments Index, and it’s packed with insights that go way beyond the usual “people are still swiping cards” narrative.
This month’s edition takes a close look at something that’s been quietly exploding in the background: online gambling and prediction markets. Spoiler alert—your younger members are all in on this trend.
But first, let’s talk about what happened with consumer spending in August, because the story there is pretty interesting.
The State of Spending: Back-to-School and Pricey Gas Keep Cards Active
August saw card spending continue its upward trajectory, which is good news if you’re tracking consumer engagement. Debit cards kept their winning streak going, outpacing credit card growth once again. Credit purchases stayed positive too, though they’ve cooled off a bit from their recent peaks.
What drove all this swiping? The usual late-summer suspects: back-to-school shopping (because those supply lists get longer every year) and elevated gas prices that had everyone wincing at the pump. Even with consumer sentiment taking a hit and wage growth sending mixed signals amid inflation jitters, people kept spending.
Consumer Confidence Takes a Hit
Speaking of sentiment, let’s address the elephant in the room. Consumer confidence dropped in August, and you can pretty much blame gas prices and tariff concerns for that mood shift.
The University of Michigan’s Index of Consumer Sentiment fell to 51.7—a 6.3% drop from July and the second consecutive monthly decline. When researchers asked people what was bothering them, higher gas prices and tariff worries topped the list. And here’s the kicker: sentiment is still sitting 13% below where it was a year ago. Translation? Elevated prices are still messing with how people view their financial futures.
The Conference Board’s Consumer Confidence Index echoed this vibe, dropping slightly from 90.2 in July to 89.4 in August.
The Job Market: A Tale of Two Reports
August’s employment picture was… complicated. The Bureau of Labor Statistics reported 162,000 new jobs, which sounds decent enough. But then ADP came in with their private-sector numbers showing only 38,000 jobs added—the slowest hiring pace since January. Plot twist, anyone?
Job gains were clustered in education, healthcare, construction, and leisure and hospitality. Meanwhile, manufacturing, professional services, and information sectors actually shed jobs. The unemployment rate held steady at 4.1%, partly because more people jumped into the labor force (participation rate hit 61.6%). Wage growth? It slowed to 3.1%, marking its lowest pace of 2026.
Inflation: Not the Direction We Wanted
Unfortunately, inflation news wasn’t particularly cheerful in August. The Consumer Price Index rose 0.4%, keeping the annual inflation rate at 3.4%—exactly where it sat in July.
Gasoline was the villain of this story, accounting for more than a third of the monthly increase. Energy costs, shelter, and eating out also contributed to the upward pressure. Core CPI (that’s the version that strips out food and energy to give a cleaner read) increased 0.3% in August, up from 0.2% the month before.
The Fed Makes a Move
On September 16, the Federal Open Market Committee did something they hadn’t done since 2023: they raised interest rates. The 25-basis-point hike brought the target range to 3.75%-4.00%.
Why? They’re trying to wrestle inflation back down while dealing with supply chain uncertainty and elevated energy prices (thanks in part to ongoing conflict in the Middle East). And if you thought this was a one-and-done situation, think again. The committee’s updated Summary of Economic Projections suggests another rate hike is likely before the year ends—probably in October or December.
The Numbers That Matter
Here’s what August’s data revealed:
- Debit purchases jumped 6.1% year over year, powered by 3.4% transaction growth. Money Services, Goods, and Gasoline sectors led the charge.
- Credit purchases climbed 3.6% year over year, with transactions up 2.8%. Gasoline made a comeback as the top contributor, followed by Goods and Services.
- Online gambling debit activity stayed strong through July, dodging the typical summer slowdown. Credit the FIFA World Cup—the six weeks of global soccer competition held in the U.S. created a massive spike in year-over-year growth.
- Gen Z dominated prediction market activity, accounting for nearly two-thirds of year-to-date debit transactions and purchases. Interestingly, they also placed the smallest average wagers compared to other generations.
- Kalshi owns the prediction market space, representing 88% of all debit transactions year to date, though their average purchase amounts were the lowest.
What This Means for Financial Institutions
Karen Postma, Senior Vice President of Risk Solutions at Velera, put it perfectly: “Online gambling and prediction markets are a small share of overall card activity, but they’re moving into the mainstream faster than many financial institutions expected, particularly among younger consumers.”
Here’s the thing—Gen Z’s heavy involvement in prediction markets, combined with evolving regulations and the very real potential for market manipulation, creates a whole new set of challenges. Credit unions and banks need to be thinking about fraud prevention, member education, and financial wellness in new ways.
“Credit unions need to understand what’s showing up in member activity so they can identify emerging risks, educate members and make sure their fraud strategies can keep pace as these markets evolve,” Postma added.
Bottom line? The payments landscape is shifting, and staying ahead means understanding not just what your members are spending on, but how emerging trends like online gambling could impact their financial health—and your institution’s risk profile.