4 minutes
Which methods do consumers prefer, and how can credit unions adapt to best serve their members?
In the dynamic payments landscape of 2023, credit unions find themselves at the forefront of change. Consumers’ options go far beyond cash, checks and physical cards. Emerging payment methods, including mobile wallets; buy now, pay later programs; and person-to-person payment apps continue to gain momentum during a time defined by both digital innovation and economic turbulence. Consumers’ payment preferences and needs remain in flux, especially across different generations. This raises crucial questions: Which methods are dominating consumer consciousness, and how can credit unions adapt to best serve their members now and in the future?
PSCU’s 2023 Eye on Payments survey, spanning a diverse sample of 1,750 credit union members and other financial institution customers (“non-members”) across the United States, uncovered valuable insights into the factors that shape consumers’ choices and usage of different payment methods. Some key highlights from the sixth consecutive study include the following.
Economic Uncertainty and Consumer Trust
Given the inflationary environment and high interest rates, it may not come as a surprise that 80% of consumers are worried about the economic outlook—and 73% feel concerned about their personal finances as a result. With the collapses of Silicon Valley Bank and other high-profile banks making headlines, 62% of respondents report feeling more concerned about the security of their money or savings compared to a year ago. This caution coincides with 77% of respondents preferring smaller FIs over larger national ones.
The survey also revealed that an all-time high of 93% of credit union members believe in the stability of their FIs and trust their credit union, while a lower percentage of non-members feel the same about their FIs. The high level of member trust and preference for smaller institutions sets credit unions apart, especially amid heightened economic and personal financial concerns. Credit unions are well-positioned to lean into this trust to grow relationships with current and potential members, as well as to expand their services and offerings with the types of innovative solutions that today’s consumers want and expect.
Digital Innovations and Emerging Methods
The survey also found that consumer interest in emerging payment offerings remains steady as digital innovations gain attention and usage. Credit union members report an increase in the availability and utilization of BNPL programs. Among those whose FI offers BNPL, 74% report having used it—an increase from 2022. Credit union members also reported a higher likelihood of using a BNPL program from a FI in 2023 (33%) compared to the past two years. Similarly, the number of consumers who use P2P payment accounts at least periodically has increased by 18% since 2021.
Preference for tap-and-go payment options, including mobile wallets and contactless cards, has overtaken inserting an EMV chip at the point-of-sale. More than half (53%) of respondents report they would rather tap-and-go than insert a chip into a point-of-sale device (38%). Mobile wallet has also surpassed swiping a magnetic stripe at the point-of-sale device.
Generational Differences in Payment Preferences
As digital solutions dominate consumer consciousness, individuals from every generation are increasingly turning to these types of innovative offerings for making payments and conducting transactions. However, this year’s study underscores the divergence in preferences between the oldest and youngest generations that is influencing top-of-wallet decisions.
Ninety-six percent (96%) of Baby Boomers, ages 59 and above, prefer to use a tried-and-true payment method, like a debit card (42%), credit card (38%) or cash (16%). Although debit is most preferred among Generation Z (49%), this cohort, ages 18 to 26, leads the way in preference for mobile wallets (13%) and person-to-person payment accounts (6%). When asked if they tend to pay more with a variety of payment methods than they did a few years ago, 80% of Gen Z agreed, compared to only 42% of Boomers, the lowest among any generation.
Applying Insights for Future Planning
For credit unions, it all boils down to providing consumers with the payment options they want and expect, while continuously seeking ways to optimize, elevate or enhance those offerings—building on the well-earned trust members have in their credit unions. Even as consumers desire security in the face of economic concerns, their attention is increasingly focused on digital offerings and emerging payment methods. Credit unions would be remiss not to invest in their digital solutions and in innovation itself. Keeping offerings fresh, relevant and aligned with consumer expectations will go a long way in retaining existing member relationships and establishing new ones.
Download the full 2023 Eye on Payments study to further explore the key findings and takeaways that your credit union can leverage to effectively market to members and achieve continual growth and success.
In his role as chief marketing officer, Tom Pierce is responsible for leading and executing marketing and communications strategy, including brand development and sentiment, public relations, go-to-market strategy, market research and events for PSCU, a CUESolutions provider. 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.
