ST. PETERSBURG, Fla.– Continued evidence of a soft economic landing, as well as softening consumer spending at the end of 2023 can be seen new data from PSCU.
The January edition of the PSCU Payments Index—which the company said is designed to provide information and insights to help financial institutions navigate the evolving financial landscape—found debit purchases among PSCU-member credit unions continued to outpace credit purchases.
In addition, the new Index also presents the third installment of PSCU’s three-part Deep Dive series on holiday spending, which includes insights into holiday season Buy Now, Pay Later (BNPL) activity. Citing Adobe Analytics data, the company noted BNPL usage hit an all-time high, up 14% year over year for the November and December timeframe.
Pulling out the Stops
“Amid the economic uncertainty that marked 2023, we saw retailers pull out all the stops to lure shoppers in throughout the holiday season, leveraging innovative new techniques – including augmented reality, TikTok purchases, and even a 23-part holiday romantic comedy from Walmart with purchase opportunities broadcast via social media channels,” Julie Conroy, chief insights officer, Datos Insights, said in a statement shared by PSCU. “Most estimates showed that consumer holiday spending increased year over year, buoyed by holiday sales starting earlier than ever. Concurrently, the migration to e-commerce continued to climb, with JPMorgan Chase estimating that approximately 23.4% of holiday sales took place online in 2023 – up from 22.5% in 2022. Fraudsters also love the ongoing digital shift, forcing merchants and issuers alike to contend with fraud on many fronts, from first-party fraud to scams and account takeovers.”
Key Takeaways
According to PSCU, key takeaways from the January report include:
- Debit purchase growth, up 4.9% for December, continued to outpace growth in credit purchases, up 0.7%. For transactions, credit grew 2.6% and debit grew 5.0% year over year.
- Holiday spending growth in the Goods sector softened in December when compared to November. Year-over-year growth in purchases for the overall Goods sector was down 1.3% for credit and up 2.9% for debit in December. For the cumulative holiday season, purchase growth in the Goods sector was down 1.2% for credit and up 2.7% for debit. For the cumulative holiday season, growth in CNP transactions (+2.2% for credit and +7.0% for debit) outpaced growth in CP transactions (-0.8% for credit and +0.9% for debit).
- The Consumer Price Index (CPI-U) increased 0.3% in December, while the 12-month rate of inflation was up 3.4%. Shelter contributed to more than half of the increase. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.3% in December, putting the 12-month Core CPI index at 3.9%
- Growth in Buy Now, Pay Later (BNPL) payments for the top BNPL merchants increased 24% for the cumulative holiday season (October to December) compared to 2022. These BNPL transactions represented 3.6% of the overall debit transactions in the Goods sector for the three-month period.
- The credit card delinquency rate continued to increase in December, reaching 2.53%, an increase of seven basis points from November and the highest point when compared to pre-pandemic 2019 data.
The full report is available for download here.
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