The Velera Payments Index: January 2025

​Velera – formerly PSCU/Co-op Solutions, the nation’s premier payments CUSO and an integrated financial technology solutions provider – published the January edition of the Velera Payments Index, the goal of which is to provide information and insights to help financial institutions navigate the evolving financial landscape to make informed, strategic decisions for their organizations and members.
 
The 2024 holiday shopping season delivered strong results for the last month of the year. Aided by the late occurrence of Thanksgiving, growth for December holiday spend, along with overall credit and debit results, were positive. Credit posted the best monthly performance for all of 2024 and aided the full-year 2024 growth to show positive year-over-year results. Debit, which had positive growth for each month of 2024, finished December close to the full-year results for purchases and transactions. In our January 2025 edition of the Velera Payments Index, we conclude our three-part series on holiday spending, which aggregates the results of the overall holiday shopping season from October to December 2024.
 
Consumer sentiment studies show mixed expectations as we start the new year, with sweeping political changes on the horizon ahead of President Trump’s Inauguration Day on Jan. 20. The Consumer Confidence Index declined in December by 8.1 points to 104.7, with less optimism in the area of future business conditions and incomes. The notable decrease places the score back where results have mainly been over the past two years. The University of Michigan Index of Consumer Sentiment was mainly unchanged from December at 73.2. The short-term economic outlook dropped 7% and the long-run economic outlook dropped 5%. Near-term inflation expectations increased from 2.8% in December to 3.3% in January.
 
In the Labor Department’s Jan. 15 update, the Consumer Price Index (CPI) increased 0.4% in December, bringing the cumulative 12-month rate of inflation up to 2.9%. Forty percent of the December increase comes from the Energy sector with the gasoline index rising 4.4%. Food increased by 0.3%, with the indexes for food at home and food away both increasing 0.3%. Core CPI, which excludes the Food and Energy sectors, increased by 0.2% in December after increasing 0.3% in the prior four months.
 
In December, jobs grew by 256,000, with increases in healthcare, government and social assistance. The increase is much larger than the 155,000 that analysts expected casting doubt on near-term rate decreases. The U.S. Bureau of Labor Statistics (BLS) reported the overall unemployment rate decreased slightly for December to 4.1%, or 691 million people. The unemployment rate has been between 4.1% and 4.2% for the past seven months. There has also been consistency in the labor force participation rate since December 2023, currently 62.5%.
 
The first 2025 Federal Open Market Committee (FOMC) meetings will conclude on Jan. 31. From the last meeting in December 2024, the Fed cut rates by a quarter-point and signaled a slower pace of rate cuts in the new year amid concerns that President Trump’s plans for trade and immigration policy changes could prolong inflation.
 
“Consumer spending was remarkably sustained throughout the holiday season in the face of increased budget consciousness, lower overall consumer confidence and real uncertainty about the future. The continued growth of online shopping and mobile purchases, as reflected in card-not-present transactions, was also notable,” said Taylor Nelms, Sr. Director, Market Insights & Advisory Services, Filene Research Institute. “Looking ahead to 2025, we see both optimistic trend lines and some worrying indicators. For many credit union leaders, there are concerns about asset quality deterioration on their balance sheets – which may impact consumer spending, especially considering record levels of consumer credit card debt. Additionally, the unsettled regulatory and policy environment is generating additional uncertainty. It will be critical for credit unions, in the face of this uncertainty, to avoid decision paralysis and remain proactive in their strategic decision-making.” 
 
Key takeaways for December include:

• For the month of December, year-over-year growth rates strengthened, impacted by the 2024 Thanksgiving holiday timing and subsequent peak shopping days occurring five days later than in 2023. Debit purchases were up 4.3% and credit purchases were up 4.0% in December. Debit transactions were up 2.5% and credit transactions were up 3.0%.
• For both credit and debit, the Goods sector had the biggest impact on the year-over-year increase, accounting for roughly half of the growth in purchases. Money Services had been the top contributor to debit purchases growth since March 2024. In December, Money Services accounted for 1.4% of the debit purchases growth while Goods accounted for 1.9% of the overall 4.3% increase.
• The 12-month CPI through December increased by 2.9%, up 0.2% from November. The Energy index increased 2.6% and accounted for 40% of the overall increase. While an increase in CPI could point toward a rate reduction, other key indicators will most likely lead to no near-term interest rate cuts by the Fed.
• The 2024 holiday shopping season ended with strong consumer purchasing and a surge in Card Not Present (CNP) activity. For the cumulative three-month holiday season, growth in Goods sector debit purchases was up 5.4% and growth in Goods sector credit purchases was up 0.6%. Of our tracked major retailers, all were positive for growth in credit and debit purchases and transactions. Much like the 2023 holiday season, Amazon again had the strongest growth for debit purchases, up 8.0% and credit purchases up 4.5% for the cumulative period.

 
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.

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