For seven years, Velera has surveyed over 1,850 credit union members and other financial institution (FI) customers nationwide to analyze evolving payment preferences. This year’s survey found that—for the first time in recent years—consumers now favor credit cards over debit as their preferred top-of-wallet option. Additionally, mobile wallets, peer-to-peer (P2P) payments and Buy Now, Pay Later (BNPL) programs are becoming more popular.
A crucial insight is the influence of younger generations—those ages 18 to 43—in driving these changes. The preferences among these generations continue to evolve, sharply contrasting with older consumers. Here’s a look at how Generation Z, Younger Millennials and Older Millennials are reshaping the payments landscape and the implications of their preferences for credit unions:
Cards
In looking at their first preferred payment method, Gen Z, Younger Millennial and Older Millennial consumers all reported a shift from debit in 2023 to credit this year, while those ages 44 and up preferred debit. The younger generations also reported they tend to pay more with credit cards now than they did a few years ago, up from more than 64% in 2023 to 81% in 2024.
When it comes to purchase types, younger consumers prefer credit across the board—from purchases costing between $30-$200 to major purchases—as well as when buying consumable and tangible goods or monthly payment subscriptions. The only transaction type in line with older generations was their preference for using cash for purchases under $10.
More than half of consumers in the three youngest generations also applied for a credit card in the last 12 months, representing a substantial increase over the previous year (Gen Z up from 36% in 2023 to 51% in 2024, Younger Millennials up from 41% in 2023 to 59% in 2024 and Older Millennials up from 37% in 2023 to 54% in 2024).
Younger consumers, in particular, are also influenced by card design and capabilities. In 2023, only 63% of Gen Z consumers and 70% of Younger Millennials at least somewhat agreed that card design influenced which card they use. This year, those numbers increased to 82% and 83%, respectively. Millennials turn to contactless card technology the most, with more than half (56%) of Younger Millennials and Older Millennials (54%) tapping their contactless card at least a few times per week.
Digital payments
Younger consumers continue to be the most avid users of mobile wallet technology, contactless cards, P2P payments accounts and BNPL programs. In fact, one in 10 consumers in the Gen Z (12%) and Younger Millennial (10%) generations report mobile wallets are their most preferred payment method. They also report a particularly strong frequency of use, with nearly four in 10 using it at least a few times per week (Gen Z at 38%, Younger Millennials at 36% and Older Millennials at 38%).
Interestingly, however, 27% of Gen Z and 42% of Younger Millennials reported they do not use mobile wallets, because mobile wallet technology is not accepted at the stores they frequent. This could signal that further adoption of this technology might slow or plateau until retail locations are able to catch up.
At least three in 10 Gen Z and Older Millennials (each 34%) and four in 10 Younger Millennials (43%) use P2P offerings—like Zelle and Venmo, among others—as their primary payment methods, all increases from 2023 (up from 18% for Gen Z, 26% for Younger Millennials and 21% for Older Millennials).
Younger Millennials have used their financial institution’s BNPL program more than any other generation (85%); however, Gen Z consumers show the most interest in future use (69%). Older Millennials, on the other hand, hold the most cryptocurrency of any generation, with an impressive 72% of credit union members saying they have invested in and/or hold cryptocurrency.
Credit union takeaways
The rising influence of younger generations in payments underscores the need for credit unions to adapt their offerings. To effectively meet these demands, credit unions should use data analytics to gain insights into member preferences, enabling more personalized communication and product offerings. Implementing a feedback loop can help to further refine digital payment experiences, allowing credit unions to keep pace with evolving member expectations.
Additionally, financial education for younger generations—especially Gen Z—is critical. Research shows Gen Z consumers are accumulating debt faster than any other generation. The good news: 86% of Gen Z credit union members would be likely or extremely likely to utilize educational classes or resources if offered by their financial institution. By helping the younger generations avoid the potential pitfalls of debt, a credit union will likely earn loyalty and status as a member’s trusted financial partner, securing a member for life.
View the full research study, including all key findings and takeaways here.
