ST. PETERSBURG, Fla.—Against the backdrop of a new presidential administration and a flurry of early activity and legislation, consumers began 2025 with strong levels of purchasing activity, despite a drop in confidence and higher-than-forecasted inflation, Velera reported.
Citing its February edition of the Velera Payments Index, the CUSO said debit purchases posted the best monthly year-over-year growth since February 2022, while credit remained strong.
"The rise of buy now, pay later highlights the increasing demand for convenience and flexibility, especially among younger consumers,” said Cody Banks, senior vice president, product experience and enablement at Velera. “While BNPL offers ease, it also brings considerable risks to consumers, such as potential overspending and debt accumulation. BNPL also poses a significant threat to traditional credit cards, challenging credit unions to reinforce benefits like rewards and credit score building that BNPL lacks. Credit unions should take the lead in educating members on the variety of payment methods available, empowering them to make informed choices and enhance their financial wellbeing.”
Key takeaways for January include:
- For the first month of 2025, year-over-year growth rates improved for debit and held steady for credit. Debit purchases were up 7.8% and credit purchases were up 2.5% in January. Debit transactions were up 4.8% and credit transactions were up 2.8%.
- For debit, Money Services returned as the top contributor to growth in purchases, accounting for one-third of the year-over-year increase. The Goods and Services sectors had the second largest impact for debit and the largest year-over-year increase in credit purchases.
- The 12-month CPI through January increased by 3.0%, up 0.5% from December. The Shelter index increased 0.4% and accounted for 30% of the overall increase. Core inflation, now at 3.3%, was up 0.4% for January, the largest increase in two years. The next opportunity for an interest rate change by the Fed is on March 19.
- Growth in Buy Now, Pay Later (BNPL) payments and transactions facilitated by cards increased 28% and 22%, respectively, for the top BNPL merchants for full-year 2024 compared to 2023.
The full report is available for download here.