Velera – formerly PSCU/Co-op Solutions, the nation’s premier payments CUSO and an integrated financial technology solutions provider – published the April edition of the Velera Payments Index and announced an evolution of the monthly report:
Welcome to the five-year anniversary edition of the Velera Payments Index – our ongoing commitment to delivering timely insights into relevant consumer payment behaviors. What began in 2020 as a weekly consumer transaction insights report in the early days of the pandemic has transitioned into four years of the monthly Payments Index. As consumer spending patterns continue to shift, we remain dedicated to providing relevant and actionable updates. Beginning with this April edition, the Payments Index will retain its monthly cadence, but will introduce a new quarterly format: a “base” edition followed by two months of Deep Dive reports. Just as in the early days of the pandemic, today’s climate – marked by economic uncertainty and declining consumer confidence – has reignited the need for timely insights. We look forward to the continued evolution of the Payments Index as a vital resource for our credit unions and our industry. Thank you to all our subscribers and readers!
On April 2, President Trump announced sweeping tariffs on imports from all nations that trade with the United States, with a 10% baseline tariff that took effect on April 9. Though a 90-day pause has been placed on most tariffs, those targeting China remain in place, fueling increased uncertainty and anticipated price increases. Consumer sentiment continues to erode, while both economists and Fortune 50 CEOs warn of the ripple effects – rising inflation, higher unemployment and the possibility of a recession if trade flows are significantly disrupted. While the impact of tariffs is not yet reflected in our March data, it is certainly weighing on consumers’ minds and beginning to influence spending behavior. Early signs suggest that American consumers may be stockpiling essential imported goods in anticipation of price increases. As this situation unfolds, we will be closely tracking how these developments shape spending behaviors in the coming months.
The Consumer Confidence Index declined for the fourth consecutive month in March to 92.9, with less optimism in the area of future business conditions and future income. The 7.2-point drop was primarily driven by consumers 55 and older and followed by those aged 35 to 55. The decline was across most income levels with one exception: those earning more than $125,000 per year. The University of Michigan Index of Consumer Sentiment dropped 11% from March to 50.8 in April – its second-lowest level in history – and has lost more than 34% year over year. Consumers across all ages, income and political demographics expressed pessimism and concern over anticipated upcoming price surges.
In the Labor Department’s April 10 update, the Consumer Price Index (CPI) decreased 0.1% in March, bringing the cumulative 12-month rate of inflation up to 2.4%. The Energy index dropped 2.4%, which was led by a 6.3% decline in the Gasoline index. Food increased by 0.4%, with the indexes for food at home up 0.5% and food away from home increasing 0.4% over the month. Core CPI, which excludes the Food and Energy sectors, increased by 0.1% in March following a 0.2% decrease in February, bringing the 12-month Core CPI to 2.8% – the smallest 12-month increase since March 2021.
In March, jobs grew by 228,000, with increases in healthcare, social assistance and transportation and warehousing. Federal government workers declined by 4,000 in March, following a decline of 11,000 in February. The overall jobs increase was larger than expected, as economists anticipated growth of roughly 130,000. February’s job growth numbers were downwardly revised by 34,000 to 117,000. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate increased slightly for March to 4.2%, or 7.1 million people, and has hovered between 4.0% and 4.2% since May 2024. On a positive note, the labor force participation rate has maintained at 62.5% since December 2023.
On April 4, Federal Reserve Chair Jerome Powell indicated that interest rate changes have a “highly uncertain outlook” as higher-than-expected tariffs are likely to raise inflation and lower economic growth, the extent of which is uncertain. While the next Federal Open Market Committee (FOMC) meetings end on May 7, there have been signals that the earliest a rate change could occur would be with the June meeting that concludes on June 18.
“Velera is excited to launch the next evolution of our Payments Index, one of the credit union industry’s best resources for timely data and insights on payment transactions. The evolution of this monthly report has been extraordinary; since its origin as a weekly transaction tracker throughout the first year of the pandemic, the Payments Index has emerged as one of Velera’s key pieces of thought leadership, offering actionable data, insightful trend analysis and prescriptive content for credit unions,” said Chuck Fagan, President and CEO at Velera. “I would also like to recognize Velera’s outstanding Marketing & Communications and Advisors Plus teams for their ongoing collaborative efforts in bringing these insights to life for our credit unions and our industry. We look forward to the continued evolution of the Payments Index and helping credit unions make strategic, data-informed decisions to fuel growth.”
Key takeaways for March include:
- The consequence of tariffs on consumer spending could have a profound impact on 2025 payment results, with mixed thoughts on timing. Price increases could begin to materialize in the coming weeks, while others could take a few months depending on supply chain constraints. We will monitor changes in consumer discretionary spending, as tariffs could impact non-discretionary spending in basic categories like supermarkets, drug stores and discount stores. While year-over-year growth remains positive in debit discretionary activity, results have softened from the start of the year, which could be a preemptive measure by Payments Index consumers in advance of high inflationary prices.
- Growth rates softened for debit in March and moderated for credit. Debit purchases were up 4.0% and credit purchases were up 2.0%. Debit transactions were up 2.3% and credit transactions were up 2.1%. The Goods sector was the top contributor to growth in debit purchases, followed by Money Services, with these two sectors accounted for just over 70% of the year-over-year increase. For credit purchases, the Services sector was the largest contributor to growth for March. Within Services, insurance sales/premiums were the top merchant category, up 8.8% compared to March 2024.
- Leaving the swipes and dips behind, contactless “tap-and-go” transactions now make up over half of all Card Present transactions on contactless cards. Digital wallets also continue to grow in popularity, with 9.9% of all debit transactions (CP & CNP) taking place via a digital wallet and 5.6% of all credit transactions (CP & CNP) via a digital wallet for March 2025.
- The 12-month CPI through March decreased by 2.4%, down 0.1% from February. The Energy index declined 2.4%, with most of the reductions coming from gasoline, which was down 6.3%. Core inflation, which excludes food and energy, is now at 2.8%, up 0.1% for March.
- Overall credit card delinquencies for March 2025 were 2.31%, down 0.11% year over year. After peaking in January 2024 at 2.67%, growth in the delinquency rate has softened each month since the peak with an average reduction of 0.11% for each month of 2025.
The full report is available for download here or can be shared as a PDF upon request. Please let us know of any questions or additional needs, or if you’d like to coordinate an interview.