ST. PETERSBURG, Fla.—A new study shows just how quickly consumers and credit union members are moving to digital payments solutions.
PSCU’s 2023 Eye on Payments study, which gauges payment preferences among credit union members and other financial institution customers, makes the trend lines clear, including changes within the past 12 months and over the longer term.
‘Dominating Consciousness’
PSCU reported its new study, now in its sixth year, found digital solutions – from mobile wallets to contactless cards and more – are “dominating consumer consciousness” as members of every generation look more frequently to these types of offerings to make payments and conduct transactions.
According to PSCU, 37% of respondents report they choose to use a mobile wallet at the point of sale (POS) or when paying for something in a retail location, with at least 28% of respondents 42 and younger saying they use their mobile wallet a few times per week. In fact, mobile wallets rank as the third most preferred way to pay (13%) for Gen Z, more than doubling in preference since 2021 (6%) and surpassing cash (12%) for the first time.
‘Divergence’ Apparent
“A continued divergence among preferences between the oldest and youngest generations was evident in this year’s survey – which is also impacting top-of-wallet decisions,” PSCU said in releasing the study. “Ninety-six percent of Baby Boomers prefer to use a tried-and-true payment method, like debit cards (42%), credit cards (38%) or cash (16%). Although debit is most preferred among Gen Z (49%), this group leads the way in preference for both mobile wallets and person-to-person (P2P) payment accounts (6%).
“A majority of Gen Z respondents (80%) agreed they tend to pay more with a variety of payment methods than they did a few years ago compared to only 42% of Boomers, the lowest among any generation,” PSCU added.
PSCU pointed out the shifts are occurring amid a “dynamic economic environment,” including ongoing inflation, high interest rates, rising fuel and grocery prices and more, which are all impacting consumer sentiment and outlook.
‘Continuously Evolving’
“The payments landscape is continuously evolving in response to the economic and geopolitical climate, new solutions, generational preferences and more, with these effects being felt by all players in the financial services space,” said Tom Pierce, chief marketing officer at PSCU. “Our aim with this annual study is to arm credit unions with the data, insights and resources they need to make informed business decisions and sustain growth, ranging from adopting innovation to leveraging established member trust and exploring emerging payments integrations, among others. Keeping products fresh, relevant and in tune with what consumers now demand is critical to retaining current member relationships and establishing new ones.”
Key Findings
According to PSCU, additional key findings in its Eye on Payments study include:
- While 93% of credit union members believe their financial institution is stable and say they trust their credit union, 63% are more concerned about the safety and security of their money/savings than they were a year ago.
- Credit union members are reporting an increase in both the availability and usage of buy now, pay later (BNPL) programs: Of those who say their financial institution offers BNPL, 74% report having used it (up from 69% in 2022).
- Despite uncertainty surrounding cryptocurrency, there is nearly a 20% increase this year in the number of consumers who have invested and/or hold cryptocurrency, up from 19% in 2022 to 23% in 2023.
- Over half of consumers ages 42 and younger (Older Millennials, Younger Millennials and Generation Z) have used text, a QR code and/or a social media app to pay for goods and services or make a purchase.
- 39% agree card design influences which card they choose to use.
- 42% of credit union members have decided to use a credit (39%) or debit card (42%) based solely upon its rewards.
- Debit solidified its place as the most preferred way to pay (43%) for the fifth year in a row, a finding underscored by a decrease in credit preference from 35% in 2020 to 29% in 2023.
Additional Findings
In addition to taking a more in-depth look at these key findings, PSCU said 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 fulfill member payment preferences and needs in key opportunity areas.
The Methodology
PSCU said it surveyed 1,750 credit union members and non-members from across the U.S. The online survey, conducted in June and July 2023, was taken by participants ages 18 to 65+. Of those surveyed, 55% were male and 45% were female, and demographic characteristics of those surveyed align with consumer data from CUNA’s Member Profile. Generations were defined as: Generation Z, ages 18-26; Younger Millennials, ages 27-34; Older Millennials, ages 35-42; Generation X, ages 43-58; Baby Boomers, ages 59 and above.
The 2023 Eye on Payments white paper is available for download on the PSCU website.