By Beth Phillips, CO-OP Director of Strategic Portfolio Growth and John Patton, CO-OP Senior Payments Advisor
As warmer weather sweeps across the country and it appears that a return to “normalcy” is more reachable than ever, people are seeking escape and looking forward to activating their long-delayed travel, vacation and entertainment plans. And Americans have money to spend! With lockdowns ending and thanks to recent government stimulus checks, the reopening of many businesses and in-person experiences couldn’t have come at a better time.
Following are our predictions for how summer spending is shaping up, as along with some recommendations for how credit unions can meet their members’ payment needs and deepen the member experience.
3 Summertime Spending Predictions
- The Return of Leisure Travel: According to polling conducted in June, nearly two-thirds of consumers expect leisure travel activities to return to “normal” by this fall, a rise of 14% since May.
One key driver of this increased confidence is that 56% of adults 18 and over are fully vaccinated, and nearly two-thirds have received at least one dose.
This optimism is borne out by airline travel data. On Sunday, June 20, the Transportation Security Administration reported screening a total of 2.1 million travelers at the nation’s airports, the most in a single day since March 2020.
- Rewards Are Set to Rebound: Despite the dip in travel activities during the COVID-19 pandemic, rewards continue to be a popular perk of credit cards. According to a study by the American Bankers Association, nearly 84% of open credit card accounts offer some type of rewards program.
Such programs offer valuable benefits to cardholders, merchants and issuers. In fact, contrary to some critiques, rewards programs maintain wide popularity and benefit cardholders across all income groups, as 77% of lower-income cardholders have an active rewards card.
As the economy rebounds and consumers scratch their itch for travel, recreation and dining out, expect the demand for travel rewards and other loyalty programs to gain increased traction with cardholders.
- Members Continue to Embrace Contactless: Cash declined in popularity during the pandemic, as contactless payments took off with both merchants and shoppers. According to the National Retail Federation, 67% of retailers accept some form of no-touch payment. Furthermore, according to a global study by Mastercard, 79% of consumers say they use contactless payments. Another consumer study found that four out of ten consumers adopted contactless or mobile payments for the first time in 2020i.
We saw a similar trend among credit unions in the CO-OP ecosystem, as mobile wallet transaction volume increased 44 percent in the second half of 2020.
What Credit Unions Should Do Now
As your members embark on their summer adventures and anticipate a return to pre-pandemic normalcy, you can do much to help them prepare.
First, make sure to promote those merchant categories that are on the upswing, especially those related to travel and tourism, such as hospitality, camping, airline bookings and car rentals. Also seek to reward those members who use your cards for home improvement, in-store retail and in-person dining purchases, to boost interchange income and ensure your card stays top of wallet and top of mind.
Next, it’s time to take another look at your rewards and loyalty programs. How do they compare with the competition? Are you incenting the right types of spending activities? If you stepped back from travel rewards this past year, it may be time to reactivate those incentives.
CO-OP Lifestyle Loyalty, coming to general availability soon, is a first-of-its-kind loyalty program in the market, bringing together best practices from credit union and national loyalty programs to competitively position your cards for success, with configurable capabilities to reinforce your brand. Leverage this program to help increase the performance of your CO-OP Debit and Credit portfolios and strengthen member relationships for a lifetime of loyalty.
Cash may be down, but it’s not out. Although the long-term trend is most certainly toward contactless and digital payments, we expect cash usage to stabilize in the short term. This means you need to ensure your ATMs are fully functional and remain fully stocked with cash.
Lastly, expect more traffic in your branches as restrictions are lifted. Consider joining the CO-OP Shared Branch network of 5,800 credit union branches nationwide, to ensure your members have ready access to in-person assistance when they need it, no matter where they live across the country.
See how past payment trends can help us predict what we might see in the future by checking out CO-OP’s latest monthly payment trends.
Partner with CO-OP to Activate Your Data and Optimize Your Payment Portfolio
You don’t need to be a data scientist to understand your payments portfolio—you just need the right tools. Access CO-OP Insights Center to begin activating your data in meaningful ways. And when you’re ready to supercharge your portfolio, reach out to CO-OP SmartGrowth Consultant Services for the support you need to make better decisions and take your program to the next level.
The original article Summer Spending Expected to Heat Up: How Credit Unions Can Win with a Member-Centric Payments Strategy can be found on Insight Vault.