RANCHO CUCAMONGA, Calif.—Despite a resurgence of COVID-19 cases and uncertainty around the arrival of a government stimulus package, credit union member spending remained strong in October, according to CO-OP Financial Services, which is also sharing strategies for keeping CU cards top of wallet as the holidays near.
Transaction volume and dollar amounts were up across both CO-OP’s credit and debit portfolios. The CO-OP credit portfolio saw transaction volume and dollar amounts increase 7% and 15%, respectively, compared with October 2019. Debit, on the other hand, saw a 3% increase in transaction volume and 18% increase in transaction amounts over the same period, CO-OP said.
CO-OP is predicting holiday spending will be different this year.
“For one, the majority of holiday shopping will take place online this year, making it that much more critical for credit unions to make sure their cards remain at the top of members’ digital wallets,” CO-OP said. “At the same time, CO-OP SmartGrowth anticipates wider variation in credit and debit usage. Financially struggling members may rely more heavily on credit for their shopping needs, while others may want to keep outstanding liabilities lower by shifting over to debit.”
A Closer Look
To prepare for an unusual holiday shopping season, CO-OP is recommending credit unions take a closer look at the channels where member segments are spending and also across which categories.
CO-OP said its analysis found the following trends within its credit and debit portfolio when comparing data from October 2020 with October 2019:
Online Bookstores (Amazon)
Transaction Volume:
- Credit: Up 49%. Debit: Up 22%
Transaction Amount:
- Credit: Up 61%. Debit: Up 30
Airline Travel
Transaction Volume:
- Credit: Down 54%. Debit: Down 13%
Transaction Amount:
- Credit: Down 63%. Debit: Down 31%
In-Person Dining
Transaction Volume:
- Credit: Down 9%. Debit: Down 7%
Transaction Amount:
- Credit: Down 2%. Debit: Up 6%
Grocery Stores
Transaction Volume:
- Credit: Up 8%. Debit: Down 5%
Transaction Amount:
- Credit: Up 27%. Debit: Up 9%
Car Rentals
Transaction Volume:
- Credit: Down 16%. Debit: Up 6%
Transaction Amount:
- Credit: Down 8%. Debit: Up 25%
Barber, Beauty Shops and Spas
Transaction Volume:
- Credit: Down 18%. Debit: Down 16%
Transaction Amount:
- Credit: Down 11%. Debit: Down 6%
Home Supply Warehouse Stores
Transaction Volume:
- Credit: Up 31%. Debit: Up 28%
Transaction Amount:
- Credit: Up 44%. Debit: Up 47%
The Amazon Opportunity
“Unsurprisingly, Amazon continues to be an immensely popular spending category among members,” CO-OP said. “Even though Prime Day is over (Oct. 13-14), CO-OP SmartGrowth expects Amazon to remain a key top-of-wallet opportunity among members.”
Airlines and hotels continue to struggle as COVID-19 cases rise in parts of the country, but the company said the dollar volume decline is less exaggerated than in previous months.
“An uptick in travel may also occur in the last two months of the year, as members travel for the holidays or look to redeem travel vouchers for trips they had postponed or rescheduled from earlier in the year,” CO-OP said.
Similarly, local restaurants, beauty and barber shops are not yet back to normal activity, CO-OP said.
“However, spending levels are improving slightly. Now may be the time for credit unions to look at launching partnerships with local businesses that are popular among their membership, as businesses scramble to try and bring customers back.”
Top-of-Digital Wallet Strategies
CO-OP noted that as digital continues to be the payment method of choice among many members, credit unions must fight for top-of-digital wallet ahead of the holiday shopping season. To do that, it is suggesting three strategies:
- Analyze Digital Usage Among Membership: “Credit unions shouldn’t assume all of their members know about or actively use the institution’s digital payments solutions. Credit unions should take the time to analyze digital wallet usage and identify their most frequent digital payments adopters versus those that may be totally new to or skeptical of digital payments,” CO-OP said.
- Educate and Activate: “Credit unions should consider launching campaigns that help educate members on how to load their cards into their digital wallets and use them. The more credit unions can do to lower the anxiety or stress a member feels about using their digital wallet, the more likely they are to use it. For members who are already active digital wallet users, credit unions should remind them of the key benefits of the institution’s cards,” CO-OP said.
- Identify Top-of-Wallet Opportunities: “To help capture a greater share of transactions and interchange opportunities, credit unions should look at the spending categories or merchants where card-not-present spending is highest among their members. The institution can then consider developing custom rewards or spend-and-get campaigns to help encourage spending,” CO-OP said.