ST. PETERSBURG, Fla.—The expiration of unemployment benefits under the CARES Act and sluggish back-to-school spending are likely factors in trends seen in the latest CU member card spend data.
PSCU’s Advisors Plus and Data & Analytics teams have released data comparing the 31st week of the year—the week ending Aug. 2, 2020, with the week ending August 4, 2019.
Among the findings:
Card Volume
- Overall card payment volume growth rates trended down for the week, likely impacted by the recent expiration of the $600 of enhanced unemployment benefits provided by the federal government since late March.
- Debit card spend was up 11.9%, representing a decline from the prior four-week average of 17.9%. Transactions were up 0.3% and have been positive for five consecutive weeks.
- Credit card spend was down 4.3% year over year, lower than its four-week average of -2.7%. Transactions, hovering close to the seven-week average of -8.1%, finished down 7.1%.
Digital Usage
- Consumers continue strong usage of contactless, mobile wallets and card-not-present (CNP) alternatives, while continuing to use less cash.
- Contactless “tap-and-go” transactions via dual interface cards continue to gain adoption, PSCU said. Debit contactless transactions have grown from 9% pre-pandemic to 12.6% of card-present activity on contactless debit cards. Contactless credit transactions have also grown from 6.5% to 9.2% of card-present activity on contactless credit cards.
- Mobile wallet (i.e. “Pays”) transactions and purchases continue to trend up for both credit and debit cards. Debit mobile wallet purchases finished Week 31 up 73.8%. Credit mobile wallet purchases are up 48.2% year over year, in line with the prior four-week average of 47.8%. These results represent six supported mobile wallets: Apple Pay, Fitbit Pay, Garmin Pay, Google Pay, LG Pay and Samsung, PSCU said.
More Volume
“We continue to see more volume conducted in a CNP manner,” the company said. “For credit, 52.9% of purchase volume and 42.1% of transactions were CNP. For debit, 43% of purchase volume and 28.6% of transactions were CNP. Purchase volume mix has held steady and is up 6.4 percentage points for credit and 7.2 percentage points for debit.”
Transaction mix is also steady and up 9.5% for credit and 7.3% for debit,” PSCU said.
Merchant Data
- Amazon, a top CNP merchant, had aggregate purchase volume increases across their various merchant categories of 88% for debit and 50% for credit.
- Cash withdrawal transactions at the ATM continue to be down. For the most recent week, the number of cash withdrawals is down 22.9%, just above the average for the past 10 weeks, which is down 22.6%.
- From a merchant category perspective, trends showed some declines relative to the overall slowing of growth.
- Grocery continues to perform well overall with purchases up 5.5% for debit and 14.9% for credit.
- Drug Stores also remain in positive territory, with purchases up 8% for debit and 3.8% for credit.
- The purchase volume of consumer goods across retail stores remains very strong, but is trending down. Debit was up 31% and credit was up 17.8% as growth continues in Electronics, Home, Discount Stores, Automobile and Sporting Goods.
“After last week’s jump into positive territory for debit spend at Restaurants, this category was down in Week 31 by 1.7%. Credit spend was down 24.3%, which is better than its eight-week average – down 29.1%,” PSCU said.
Additional Merchant Data Points
- Services saw another week of decline, with debit finishing up 4.9% and credit finishing down 0.9%. Positive contributors include Healthcare and Home Services, while Personal and School Services continue to worsen.
- Travel and Entertainment remain the two most significantly impacted sectors. Travel purchases were down 30.4% for debit and 58.9% for credit, while Entertainment was down 37.9% and 53.7%, respectively.
Hot Zone Spending
According to PSCU, some differences are evident by market, with the “hot zones” underperforming.
- Overall U.S. spend was up 12% for debit and down 4.1% for credit.
- The initial eight states/districts (California, Connecticut, D.C., Illinois, Louisiana, Michigan, New Jersey and New York) that were hardest hit by the pandemic (“hot zones”) saw debit spend up by 11.6% and for the past five weeks have been within 1% of the overall U.S. spend, PSCU said. Credit spend was down by 7.4% last week and has been lower than the overall U.S. spend since April by roughly 4%.
- For the past 10 weeks, the eight states that never issued formal “stay at home” orders continue to see growth less than the overall U.S. Debit spend was up 3.7%. Credit spend was down 5.2%. These states include Arizona, Iowa, North Dakota, Nebraska, Oklahoma, South Dakota, Utah and Wyoming.
- A second group of 10 states that were identified as new “hot zones” by the White House Coronavirus Task Force has performed close to overall U.S. results, with purchases up 11.5% on debit and down 4.9% on credit for the current week. These states include Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi, Nevada, South Carolina, Texas and Utah, PSCU said.
- PSCU’s Weekly U.S. State/Territory Analysis is available on PSCU.com/COVID19, ranking U.S. states and territories by year-over-year performance for debit purchases, credit purchases and ATM transactions.
Sluggish Back-to-School Spending
“We saw a slowdown in overall card payment volumes in Week 31 that we can attribute, in part, to the expiration of the $600 enhanced unemployment benefits,” said Glynn Frechette, SVP, Advisors Plus at PSCU. “At the same time, we know from our data that back-to-school time is second only to the holiday season as a purchase event. Early indications show some sluggishness this year, given delays in school openings and variations in attendance due to the ongoing COVID-19 pandemic. We will continue to monitor these trends as school resumes in various experiences throughout the country, along with new executive actions on additional stimulus relief.”