PSCU: 2023 Eye on Payments – Pt. 2
In this blog, PSCU Chief Marketing Officer, Tom Pierce, explores the importance of emerging payments, digital innovations, card design and rewards programs to consumers today.
By: Tom Pierce, Chief Marketing Officer, PSCU
Today’s consumers are interested in emerging payments, like Buy Now, Pay Later (BNPL) offerings and cryptocurrency, both of which are becoming more mainstream. Digital innovations, often those offered by fintechs and non-traditional financial institutions, are increasingly popular as well. Card design has also grown in popularity, and rewards programs are also having a moment as consumers are looking to get more “bang for their buck,” especially in the uncertain economy.
For the sixth year in a row, PSCU set out to gauge the current state of payment preferences among credit union members and other financial institution customers (“non-members”) in our 2023 Eye on Payments study. The study explores the factors influencing consumers when it comes to their choice and usage of different payment methods, as well as how these factors may vary among different life stages and economic events. Credit unions can look to key takeaways to help with decisions and how to optimize offerings to adapt to the evolving preferences and needs of their members to better serve them now and in the future.
In this second blog from our 2023 study, we explore the importance of emerging payments, digital innovations, card design and rewards programs to consumers today.
Consumer interest in emerging payments options persists
Despite the fluctuating economic outlook, credit union members and non-members remain interested in exploring emerging payments offerings. Members are reporting an increase in the availability and usage of BNPL programs. Of those who say their financial institution offers BNPL, 74% report having used it (up from 69% in 2022). Thirty-five percent (35%) have used a program offered through another entity, like Affirm or Klarna. Credit union members said they would be more likely to use a BNPL program this year (33%) than in the past two years (31% in 2022 and 25% in 2021). Younger Millennials are the demographic most likely to use their financial institution’s BNPL program (61%).
While there is still much uncertainty around cryptocurrency, there is a slight increase in the number of consumers who have invested and/or hold cryptocurrency, up from 19% in 2022 to 23% in 2023. Members and non-members (30% each), report the same level of interest in learning more about it. Millennials (42%) hold the most cryptocurrency of any generation. Consumers with higher income are more likely to invest in cryptocurrency (38% average or above vs 17% below average). Of those who have invested in cryptocurrency, a majority (56%) hold bitcoin.
Digital innovations capture share of mind and utilization
New and cutting-edge offerings drive interest and adoption among consumers of all ages. For example, Apple launched a card offering in 2019 and savings account solution in 2023. Half of survey respondents (50%) said they are familiar with the new Apple Card and/or Apple Savings, and of those familiar with it, 46% have either already opened one of these accounts or plan to in the next six months. The popularity of P2P payment accounts has also risen by 18% since 2021, with 57% of Younger Millennials using the technology regularly or as a primary payment method. PayPal remains the most popular P2P platform (82%).
Additionally, over half of consumers ages 42 and younger (Older Millennials at 58%, Younger Millennials at 61% and Gen Z at 54%) have also used text, a QR code and/or a social media app to pay for goods and services or to make a purchase. More credit union members received a digital card to use while waiting on a physical card in 2023 (30%) than in 2022 (23%), and of those members who received one, 86% used their digital card while waiting for the physical card to arrive.
Card design and rewards drive usage
Convenience, ease of use and speed have historically led the way behind why consumers turn to certain credit or debit cards. However, other factors like card design and rewards also play an important role. Four in 10 credit union members (39%) agree card design, including the material (i.e. metal) or way in which it is made (i.e. sustainably), influences which card they choose to use. This is particularly true for younger consumers, as 70% of Millennial respondents and 63% of Gen Z respondents report card design influences which card they choose, and only 16% of Boomers report the same.
Reward offerings are also key. Forty-two percent (42%) of credit union members decided to use a credit (39%) or debit card (42%) based solely upon its rewards, with the majority reporting they receive rewards on their credit cards (54%). More than half agree that being able to earn rewards makes them want to use their cards more (49% for credit and 52% for debit).
Credit unions must continue to innovate, keeping a pulse on emerging payments offerings as they become more mainstream to evaluate when and how it makes sense to provide them to members. When it comes to cryptocurrency, many consumers have already shifted their expectations to using it as a longer-term investment opportunity. Resources like PSCU’s cryptocurrency microsite hold a wealth of information and materials curated to help credit unions stay up-to-date as the crypto space continues to evolve. Providing counseling and educational materials about BNPL and cryptocurrency offerings – and the associated risks of both – is critical, even if those programs are not offered by the credit union, as many members will search for and encounter those offerings elsewhere.
Members crave flexibility when it comes to picking a card out of their wallet — they want the option to choose with what products their card is made, how it is designed and they want to select the rewards which will benefit them most. Credit unions should consider partnering with a fintech solutions provider, like PSCU, that can help them expand and elevate their card design and reward capabilities.
Explore key takeaways that your credit union can leverage to effectively market to members in order to achieve continual growth and success. Download the full 2023 Eye on Payments study now.
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