ST. PETERSBURG, Fla.—Consumer spending, mainly with debit cards over credit cards, remained steady for March amid other strong economic indicators that may dampen any near-term Fed rate cuts, according to PSCU/Co-op Solutions’ April Payments Index.
The latest Payments Index includes a “deep dive” into digital payments, where the company noted contactless and tokenized credit transactions continue to rise, along with contactless debit transactions.
“These increases can be attributed to the higher quantity of contactless cards being issued, coupled with greater merchant acceptance, resulting in consumers becoming more accustomed to ‘tapping’ their cards,” Jeremiah Lotz, SVP-product experience said in a statement. “As we reach the three-year anniversary of the Payments Index, we continue to evolve the report’s data view and analysis to provide relevant insights in the changing financial landscape.”
Key Takeaways
According to the company, key takeaways from the April report include:
- For March, growth rates for debit activity continued to remain stronger than growth in credit activity. Debit purchases were up 6.6%, while credit purchases were down 0.3%. Debit transactions were up 5.8% and credit transactions were up 2.2% year over year.
- The Consumer Price Index (CPI-U) increased 0.4% in March, while the 12-month rate of inflation was 3.5%. Shelter and Gasoline again contributed to more than half of the increase. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.4% from February, putting the 12-month Core CPI index at 3.8%, the analysis states.
- As digital payment transactions continue to grow, digital payment purchases represented over half of overall purchases for both credit (54%) and debit (51%) cards. “While physical card activity softened, contactless cards ‘tap and go’ activity continued to grow, now representing 19% of all credit card transactions and 14% of all debit card transactions, up from 12% and 9%, respectively, in 2023,” PSCU/Co-op Solutions said.
- Apple Pay is maintaining its market share dominance in the digital wallet space, representing 93% of digital wallet debit transactions and 89% of digital wallet credit transactions.
- Balance transfer usage was down during what is traditionally the seasonal peak month of March. “The growth in the number of balance transfers was down 41% year over year, impacted by factors including rising credit card delinquency rates, liquidity concerns and higher interest rates,” the analysis states. “The average amount of balance transfers was up 6%, or $236, at $4,187.”