‘Mixed’ Performance Seen in PSCU Analysis of Card Spend During First Week of 2021

ST. PETERSBURG, Fla.–Data from member card spend during the first week of 2021 show payment volume growth was “mixed,” according to PSCU.

That’s one of the overall findings in analysis by PSCU’s Advisors Plus and Data & Analytics team, which has released year-over-year weekly performance trends for the first week of the new year.  In this week’s installment, PSCU compares the week ending Jan. 3, 2021 with the week ending Jan. 5, 2020. 

“The first week of 2021 showed mixed card payment volume growth rates, with stronger results in debit,” said Glynn Frechette, SVP, Advisors Plus at PSCU. “Strong performance continued across the Goods, Service and Grocery merchant categories. In this week’s deeper dive, we explore the increased volume of holiday purchase returns within the Goods sector. With the considerable growth in ecommerce activity throughout the holiday season, return volume rose as expected to rise compared to past years, as Card Not Present purchases typically generate much higher returns than Card Present purchases.”

Card Payment Growth Rates

According to PSCU:

• Debit card spend was up 16.4% in Week 1 and debit transactions finished up 3.9%. Debit purchases were higher than the four-week average of +15.1% while transactions were in line with the four-week average of +3.7%.
• Credit card spend in Week 1 finished up 1.9%, lower than the four-week average of 2.9%. Transactions finished down 1.6%, in line with the four-week average of -1.6%. 

Card Not Present

According to PSCU, consumers continue to show strong adoption of digital payments, including contactless, mobile wallets and Card Not Present (CNP) alternatives, while using less cash.

Among the findings:

• Contactless “tap-and-go” transactions via dual interface cards continue to show strong consumer acceptance, with debit showing notable strength. Debit contactless transactions as a percent of card present activity on contactless debit cards have doubled from around 8.4% in January 2020 to 16.9% in Week 1 of 2021, PSCU said.
• Contactless credit transactions have also grown from 6.5% to 12.7% of card present activity on contactless credit cards in the same timeframe. “We continue to view these results as conservative, as the ratio considers the proportion of contactless activity to all card present transactions, not just those able to be tapped,” PSCU said.
• Mobile wallet (i.e. “Pays”) transactions and purchases for both credit and debit cards continue to show good growth with Card Present activity. Debit mobile wallet purchases finished Week 1 up 66.7% year over year, higher than the four-week average of +64.4%, PSCU reported.
• Credit mobile wallet purchases are up 45.8% year over year, also higher than the four-week average of +43.7%. These results represent six supported mobile wallets: Apple Pay, Fitbit Pay, Garmin Pay, Google Pay, LG Pay and Samsung Pay.
• “We continue to see more volume conducted via Card Not Present (CNP) transactions. For credit, 55.9% of purchase volume and 46.4% of transactions are CNP. For debit, 44.7% of purchase volume and 32.2% of transactions are CNP,” PSCU said.
• Purchase mix has held steady and is up 6.5 percentage points year over year for credit and 6.4 percentage points for debit. Transaction mix also remains steady, up 9.1 percentage points for credit and 7.5 percentage points for debit year over year.
• Cash withdrawal transactions at the ATM remain down year over year. For the most recent week, the number of cash withdrawals was down 18.6%, in line with the four-week average of -18.9%. For the pandemic period of Weeks 13 through 52, total cash withdrawn was down 13.9%, PSCU reported.

Merchant Spend

From a merchant category perspective, the start of 2021 continues with strong results in Goods, Service and Grocery Stores and challenging year-over-year performance for Travel, Entertainment and Restaurants, according to PSCU.

The company reported:

• Goods spend was up 38.4% year over year for debit and up 21.7% for credit; Service spend was up 12.8% year over year for debit and up 7.1% for credit; Grocery spend was up 10.5% for debit and up 15.1% for credit.  
• Travel was down 24.7% year over year for debit and down 49.9% for credit; Entertainment was down 27.7% for debit and down 43% for credit; Restaurants were down 1.8% for debit and down 21.3% for credit.  

Regional Spend Analysis

Using data from the U.S. Bureau of Economic Analysis (BEA) for economic analysis, PSCU reported:

• Overall U.S. spend was up 1.9% for credit purchases. The Plains (+6.5%) and Southeast (+4.5%) finished as the strongest regions for Week 1. The New England (-2.5%) and Southwest (-0.4%) regions had the lowest credit purchase performance.
• Overall U.S. spend was up 16.4% for debit purchases. The Plains (+18.6%) and Southeast (+19%) finished as the strongest regions for Week 1. Hawaii (+7.7%) and the Rocky Mountain (+12.2%) region had the lowest debit purchase performance.
• PSCU noted its Weekly U.S. State/Territory Analysis is available at www.PSCU.com/COVID19, ranking U.S. states and territories by year-over-year performance for debit purchases, credit purchases and ATM transactions.

The Deeper Dive

In its latest analysis, PSCU’s “deeper dive” looks at returns over the holiday period in the Goods sector.

Among the findings:

• Returns within the Goods sector over the cumulative nine-week holiday period (Nov. 2 through Jan. 3) are up. For credit cards, return transactions were up 5% and return purchases are up 16.1%. For debit cards, return transactions were up 25.7% and return purchases were up 43.8%.
• For the week ending Jan. 3, there was a significant increase in returns for both debit and credit, according to PSCU. Debit return transactions finished up 51.5% and debit return purchases are up 76.2% year over year. Credit return transactions finished up 10% and credit return purchases are up 19.4%.
• “While returns were up considerably year over year, increases were expected given the significant growth in CNP purchases, which typically see returns up to three times higher than CP purchases,” PSCU said. “Additionally, shipping companies generally predict Jan. 2 as the highest day for return volume as consumers emerge from the holiday period.”
• The average return purchase is also up. For the week ending Jan. 3, the average debit card return in the Goods sector was -$55.49, up 16.3% year over year. The average credit return in the Goods sector was -$75.95, up 8.5% year over year.