ST. PETERSBURG, Fla.—Consumer spending further softened in September, with decreases for both debit and credit, according to the October edition of the Velera Payments Index.
Influencing lower consumer spending were regional impacts from Hurricane Helene in the southeastern states, namely Florida, North Carolina, South Carolina, Tennessee and Georgia, and the continued impact of lower gasoline prices, Velera said.
Key takeaways, according to Velera:
- For September, year-over-year growth rates were at their lowest levels for 2024. Debit purchases were up 1.3%, with two-thirds of the growth coming from Money Services (Cash App, Venmo, Zelle, etc.). Credit purchases were down 1.6%, with half of the reduction coming from the Gasoline sector (0.9%). Debit transactions were up 1.5% and credit transactions were up 0.6% year over year.
- Multiple survey measures reported declines in consumer confidence, increases in delinquencies and overall consumer stress, which may potentially constrain spending during the upcoming 2024 holiday period, Velera said.
- Money Services, mainly comprising P2P payments, continued to provide strong growth for debit card purchases, resulting in an increase as a percentage of overall debit card purchases. For September, growth in money services debit purchases was up 9.6% year over year. As a percentage of overall debit card purchases, money services represented 12.2% for September 2024, up from 11.2% a year ago.
- The September delinquency rate was up 15 basis points compared to August 2024, reversing its August improvement and resuming a multi-month trend of increases. Delinquencies are now at their highest point since January 2024.
- Contactless transactions on dual interface cards continued to show significant growth. As of September, almost one out of every two card present transactions were tapped (50% for debit and 47% for credit).
Deep Dive Into P2P
The October report revisited a Deep Dive on money services, which includes mostly peer-to-peer (P2P) payments.
"P2P payments have experienced tremendous growth over the past several years, initially spurred by the pandemic as consumers moved away from cash and physical transactions,” said David Albertazzi, director of retail banking and payments at Datos Insights. “We now see that many consumers have permanently shifted their purchasing habits, including the adoption of digital wallets. While platforms like Venmo, Zelle and Cash App are not true digital wallets, their rising usage closely mirrors the growth of digital wallets. Also significant is that this trend isn't limited to younger demographics; according to a recent Datos Insights survey, more than half of consumers under age 57 have adopted digital wallets and engage in P2P payment transactions."
The full report is available for download here.