NEW YORK— A new study highlights credit unions' growing competitive payments edge, especially in rural communities and among Gen Z consumers, as the financial landscape continues to evolve.
“With a remarkable 71% top-of-wallet conversion rate among small-town and rural small and medium-sized businesses (SMBs), CUs are emerging as serious contenders against national and digital-only banks,” PYMNTS said.
While financial incentives remain the top reason consumers and businesses choose a primary payment card, many CU cardholders prioritize spending control tools over cash back or lower interest rates, PYMNTS noted.
“With 20% of CU users citing these features as a key decision-making factor — 25% more than national and digital-only bank users — it’s clear that financial management capabilities are a growing differentiator,” PYMNTS said.
Yet despite these strengths, CUs may be leaving some opportunities on the table, PYMNTS added.
“High-income consumers and Millennials are less likely to put their CU-issued cards at the top of their wallets, and rewards programs offered by national and digital-only banks continue to draw consumers away,” PYMNTS added.
The data is from the “Credit Union Innovation Readiness Index: The Path to Top-of-Wallet Conversion,” a PYMNTS Intelligence and Velera collaboration that surveyed 12,081 U.S. consumers and 2,000 U.S. SMBs to understand their card usage and the factors influencing their top-of-wallet card choices.
The report paints a clear picture that credit unions have a unique opportunity to expand their influence by building on their strengths, PYMNTS said.
“Their high top-of-wallet conversion rates among Gen Z and rural SMBs prove consumers value more than just rewards — they appreciate financial control. However, to stay competitive, CUs must refine their offerings for high-income earners and millennials, who are more likely to be swayed by premium rewards and digital-first experiences,” PYMNTS concluded.