by Naomi Anderson, Vice President, Prepaid
How are credit union professionals like meteorologists? Both need to look out for changes in seasonal patterns. For credit unions, however, those patterns represent consumer behavior that can give insights into how to meet member needs. This holiday season’s consumer patterns show overall tightening of budgets, but with pockets of increased spending among younger generations, especially via digital channels. Meanwhile, fraud temperatures are rising and heating up the need for consumer protections.
When it comes to holiday spending, more than half of consumers are reducing expectations for what they can afford to give in 2023 as many continue to navigate credit debt from last year (NerdWallet).
One realistic step credit unions can take to help members address financial challenges is to offer a prepaid program that provides flexibility and control over spending. Cardholders can quickly load the exact amount they want to spend online, by phone, or even through a mobile app to make purchases in stores or online without the pitfalls of interest or debt.
The Impact of Millennials and Gen Z on Holiday Shopping
Even as many tighten their budgets, younger demographics and an earlier shopping season are driving growth. At least a third of Gen Z consumers began holiday shopping in August but not out of concern for their budgets (Morning Consult Pro). In fact, well over a third of Gen Z consumers plan to spend more this holiday season from last year, about twice that of other age groups (Shopify). These young shoppers are ready for your credit union’s help in finding ways to wisely and conveniently manage their holiday spending, and the sooner the better since they are ahead of the seasonal shopping game.
Millennials and Gen Z are also leading the way in utilizing digital payments. While the digital gift card market is growing overall, about 40% of both Millennials and Gen Z buy virtual gift cards every three months while only 26% or fewer of older adults do the same (Retail Dive). More than a third of Gen Z also utilize mobile payments as compared to less than a quarter of the general population (PWC).
Prepaid cards that take advantage of digital technology are a perfect fit for the needs of these optimistic young holiday shoppers. Cardholders can use companion mobile apps to track and manage spending and easily add tokenized prepaid cards to their mobile wallets, making these cards an ideal fit for younger demographics who utilize their phones for payments.
Consumers are not the only ones who increase their activities during the holiday season, especially in the digital sphere. Experts point to a 127% increase in suspected digital fraud activity between Thanksgiving and Cyber Monday for U.S. purchases with account takeover being one of the most prevalent (TransUnion). As consumers continue to shop online more than ever, protecting their personal information is also becoming a greater challenge.
Since prepaid cards aren’t tied to members’ accounts, these cards can help keep account information safe while allowing members to enjoy the convenience of shopping with a card, especially with the addition of tokenization as another layer of protection.
By understanding different consumer shopping patterns and their unique needs, your credit union can offer relevant products and services that promote member loyalty and attract new generations. This holiday season, whether members are splurging for the holidays or holding to a strict budget, they need a flexible solution that enables them to shop securely through the channels that suit them best.
At Envisant we’re here to help you be the difference for your members. To learn how our team of prepaid experts can help, contact the Envisant sales department at 1-800-942-7124.
Originally Published on CUInsight.