Velera – the nation’s premier payments CUSO and an integrated financial technology solutions provider – published the May edition of the Velera Payments Index, which includes a deep dive into digital payments:
Even as consumer sentiment and confidence continued to erode, consumer purchasing behavior remained positive in April, with increased growth in debit activity and ongoing consistent growth in credit activity. Consumer goods led the charge, perhaps signaling early purchasing ahead of expected tariff impacts. On May 11, negotiations with China resulted in a temporary pause on tariffs, reducing the effective rate of Chinese imports to 30% for the next 90 days. In our May 2025 edition of the Velera Payments Index, we revisit the consumer card payment ecosystem with a focus on digital payments.
The Consumer Confidence Index posted another substantive decline for April, dropping 7.9 points to 86.0. “The three expectation components – business conditions, employment prospects and future income – all deteriorated sharply, reflecting pervasive pessimism about the future,” said Stephanie Guichard, senior economist, Global Indicators at The Conference Board. The decline was across all age groups and most income levels. The University of Michigan Index of Consumer Sentiment dropped 8% from March to 52.2 in April. There was a much larger drop-off in the Index of Consumer Expectations, with the area of personal finance and business conditions dropping 32% since January. Weaker income growth in the year ahead was cited by consumers, which can lead to a slowdown in spending.
In the Labor Department’s May 13 update, the Consumer Price Index (CPI) increased 0.2% in April, bringing the cumulative 12-month rate of inflation up to 2.3%. Shelter, which accounted for more than half of the monthly increase, was up 0.3% for April. The energy index increased, up 0.7 percent, as increases in natural gas and electricity more than offset a decline in gasoline. The food index fell 0.1 percent in April.
Jobs grew by 177,000 in April, with increases in healthcare, transportation, warehousing, financial activities and social assistance. This increase was mainly in line with the average monthly increase over the past 12 months of 152,000. While the BLS reported that federal government workers declined by 9,000 in April, new reporting from outplacement firm Challenger, Gray and Christmas cited that half of all layoffs year to date through April were the result of “DOGE actions” and accounted for the reduction of 283,000 jobs in 2025. March’s job growth numbers were downwardly revised by 43,000 to 185,000, and February was revised downward by 15,000 to 102,000. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate was unchanged for April at 4.2%, or 7.1 million people.
On May 7, Federal Reserve Chair Jerome Powell indicated that interest rates would remain unchanged for the benchmark overnight rate of 4.25% to 4.5%. The Fed Chair indicated a more wait-and-see approach given the uncertainty in the economy stemming from the implications of tariffs, employment and potential inflation. Stagflation, the concurrence of higher inflation and slower economic growth, has been topical and presents unique challenges for the Federal Reserve to navigate. The next scheduled Federal Open Market Committee (FOMC) meeting concludes June 18, where subsequent rate adjustments would be communicated.
“The digital wallet landscape is becoming increasingly fragmented, with offerings ranging from hardware-based options like Apple Pay and Google Pay to app-based wallets such as PayPal and even proprietary solutions from retailers and financial institutions. Each type has strengths and limitations, but all depend on widespread consumer adoption and broad merchant acceptance to succeed,” Thad Peterson, Strategic Advisor, Datos Insights. “With one in five digital wallet users now regularly leaving home without a physical wallet, coupled with usage projected to surpass debit cards at the point of sale by 2027, credit unions must act decisively. Ensuring credit unions’ cards and accounts are fully integrated with the most widely used digital wallets – Apple Pay, Google Pay, PayPal, Amazon – is essential to maintaining relevance, convenience and top-of-wallet status with members in a fast-evolving payment ecosystem.”
Key takeaways for April include:
- Growth rates improved for debit in April and remained consistent for credit. Debit purchases were up 5.8% and credit purchases were up 1.9%, while debit transactions were up 3.7% and credit transactions were up 2.3%. The Goods sector was again the top contributor to growth in both credit and debit purchases, which may indicate consumers buying now to avoid potential upcoming tariff impacts. The Service sector remained a top contributor to year-over-year growth, with insurance sales/premiums having notable increases, up 6.8 for credit purchases and up 6.9% for debit purchases.
- Growth in digital payment transactions was up 6.4% on credit and 10.9% on debit for April, while growth in physical card transactions was down 0.8% for credit and down 1.1% for debit. Within digital payments, the growth was attributable to increases in tokenized transactions. Within physical card transactions, growth in contactless transactions was offset by declines in chip/EMV and mag stripe activity.
- The 12-month CPI through April increased by 2.3%, down 0.1% from March. Half of the increase was attributable to the shelter index. Energy increased, influenced by natural gas and electricity, offsetting drops in gasoline. Core inflation, which excludes food and energy, remained at 2.8% for April.
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.