ST. PETERSBURG, Fla.— Debit transactions continued to outpace credit in November, as consumers hit record totals for online shopping, Velera reported.
“The U.S. economy has been surprisingly strong the last few years despite high inflation and corresponding rate increases. It’s no surprise that 2024 holiday spending is on pace to break records as inflation has cooled and consumer sentiment improves,” said Ryan Myers, senior vice president, Advisors Plus. “However, community financial institutions need to proactively respond to the shift in consumer payment behavior. It’s crucial to gain market share in digital wallets while the channel is rapidly growing.
“Additionally, the continued adoption of buy now, pay later (BNPL) services at the expense of traditional credit cards is a significant threat,” continued Myers. “We must combat consumer temptation at checkout by ensuring they understand the opportunity cost of not using valuable reward cards and leveraging easy-to-use BNPL services offered by their primary financial institution to better manage spending.”
Key takeaways for November, according to the Velera Payments Index:
- As consumers spent record amounts online from Thanksgiving Day through Cyber Monday (Nov. 28 through Dec. 2), overall debit purchases were up 22.3% and Goods sector debit purchases were up 11.1% within the Payments Index data for this intensive five-day spending period. Overall credit purchases were up 9.0% and Goods sector credit purchases were up 2.6%.
- For the month of November, year-over-year growth rates were mixed, impacted by the 2024 Thanksgiving holiday and subsequent peak shopping days occurring five days later than in 2023. However, any appearance of softening in growth will likely be picked up in December, which includes a record Cyber Monday. Debit purchases were up 6.2%, while credit purchases were down 2.1% in November. Debit transactions were up 4.5% and credit transactions were up 0.4%, Velera said.
- For credit, the Goods sector had the biggest impact to the year-over-year decline. For debit, Money Services continued to be the largest contributor to the growth in debit purchases, accounting for 2.0% of the 6.2% year-over-year increase.
- With two-thirds of the 2024 holiday shopping season reported, growth in Goods sector debit purchases remained positive, up 4.8%, while growth in Goods sector credit purchases was down 2.2% for the cumulative shopping season through November. “Of our tracked major retailers, all were positive for growth in debit purchases and negative for growth in credit card purchases. Amazon had the strongest growth for debit purchases, up 4.2%, and Walmart had the strongest growth in credit purchases, down 0.7% for November,” Velera said.
The full report is available for download here.