The Velera Payments Index February 2025: A Deep Dive into Buy Now, Pay Later (BNPL)

Against the backdrop of a new presidential administration and a flurry of early activity and legislation, consumers began 2025 with strong levels of purchasing activity, despite a drop in confidence and higher-than-forecasted inflation. The February edition of the Velera Payments Index revealed Debit purchases posted the best monthly year-over-year growth since February 2022, while credit remained strong. This edition also provides a Deep Dive into Buy Now, Pay Later (BNPL) consumer activity and the continued rise in popularity of the offering.

Key takeaways include:

• For the first month of 2025, year-over-year growth rates improved for debit and held steady for credit. Debit purchases were up 7.8% and credit purchases were up 2.5% in January. Debit transactions were up 4.8% and credit transactions were up 2.8%.
• For debit, Money Services returned as the top contributor to growth in purchases, accounting for one-third of the year-over-year increase. The Goods and Services sectors had the second largest impact for debit and the largest year-over-year increase in credit purchases.
• The 12-month CPI through January increased by 3.0%, up 0.5% from December. The Shelter index increased 0.4% and accounted for 30% of the overall increase. Core inflation, now at 3.3%, was up 0.4% for January, the largest increase in two years. The next opportunity for an interest rate change by the Fed is on March 19.
• Growth in BNPL payments and transactions facilitated by cards increased 28% and 22%, respectively, for the top BNPL merchants for full-year 2024 compared to 2023. 

What should credit unions do now?

• Credit unions should keep a pulse on member usage of alternative payments, including BNPL. To offset the impacts of BNPL, credit unions should constantly communicate the value of their card offerings, including zero liability, rewards and convenience. Additionally, credit unions should optimize card integration into digital banking, leverage the usage of mobile wallets and consider the addition of post-purchase installment options on their credit card products.
• According to Velera’s Advisors Plus Payments & Deposits Consulting, credit unions that don’t focus on this area in 2025 should expect volume growth to be nominally lower or even decline.
• Credit unions should strengthen their portfolios by offering competitive rewards products that drive member engagement and enhance loyalty. Positioning rewards programs as valuable financial tools will allow credit unions to deepen member relationships, increase transaction volumes and boost fee income.

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