ST. PETERSBURG, Fla.–The ongoing depletion of stimulus funds by CU members is seen as one reason for a softening of spending in the latest data released by PSCU, which shows the types of items being purchased also changed a bit.
PSCU’s Advisors Plus and Data & Analytics teams released their latest analysis of year-over-year weekly performance trends, comparing the seventh week of the year (ending Feb. 14, 2021) with the week ending Feb. 16, 2020.
“While year-over-year growth rates remained positive in Week 7, card payment volume softened for both debit and credit as stimulus funds were depleted,” said Glynn Frechette, SVP, Advisors Plus at PSCU. “Some large retailers reported a shift in purchase behavior from larger-ticket items to more basic necessities, indicating consumers were more cautious with the smaller amount received from the second round of federal stimulus payments. In this week’s deeper dive, we revisit the Service sector, where we see a mix of positive growth across all segments with only a few notable drops in academic categories including schools and colleges.”
According to PSCU, growth rates for both debit and credit softened in Week 7, as the effect of the stimulus monies received in early January are now wearing off.
Among the overall trendlines:
- Debit card spend was up 12.5% in Week 7 and debit transactions finished down 1.2%. Debit purchases were lower than the previous four-week average of +21.7% and transactions are also lower than the previous four-week average of +5.4%.
- Credit card spend in Week 7 finished up 1.5%, below the previous four-week average of +4.4%. Transactions finished down 5.0%, lower than the previous four-week average of -2.5%.
Digital Payments/Card Not Present
PSCU said 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 related data points:
- 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 more than doubled from around 8.4% in January 2020 to 18.5% in Week 7 of 2021.
- Contactless credit transactions have also more than doubled, growing from 6.5% to 13.6% of Card Present activity on contactless credit cards in the same timeframe, PSCU said.
- “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,” the company said in its analysis.
- 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 7 up 52.0% year over year, lower than the previous four-week average of +63.5%. Credit mobile wallet purchases are up 38.0% year over year, lower than the previous four-week average of +45.1%. The 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, 54.3% of purchase volume and 44.0% of transactions are CNP,” PSCU said. “For debit, 43.4% of purchase volume and 31.0% of transactions are CNP.”
- Purchase mix has held steady and is up 6.5 percentage points year over year for credit and 6.5 percentage points for debit. Transaction mix also remains steady, up 9.7 percentage points for credit and 7.8 percentage points for debit year over year.
- Cash withdrawal transactions at the ATM are down year over year. For the most recent week, the number of cash withdrawals was down 24.4%, below the previous four-week average of -17.5%.
Merchant Spend
From a merchant category perspective, the start of 2021 continues to show strong results in Goods, Utilities, Service and Grocery Stores, while year-over-year performance for Travel and Entertainment remains depressed, PSCU said.
Drug Store performance has seen a steady decline in the past few weeks (All percentages are year-over-year weekly comparisons).
Among the related data points:
- Purchases in the Goods sector remain strong, up 20.1% for credit and 24.8% for debit; Utilities spend was up 16.0% for debit and up 10.7% for credit; Service spend was up 11.3% for debit and up 4.9% for credit; Grocery spend was up 8.0% for debit and up 17.5% for credit.
- Sectors trying to return to positive growth include Drug Stores, which were down 3.5% for debit and up 0.8% for credit, and Restaurants, which finished down 4.1% for debit and down 20.0% for credit.
- Gasoline is the only sector within credit and debit that posted an improvement from the previous week in year-over-year growth, finishing up 1.9% for debit and down 5.4% for credit.
Regional Spend
With its analysis based on segmentation used by the U.S. Bureau of Economic Analysis (BEA), PSCU reported:
- Overall U.S. spend was up 1.5% for credit purchases. The Great Lakes (+4.2%) and Southeast (+5.8%) finished as the strongest regions for Week 7. Hawaii (-4.4%) and the Far West region (-6.8%) had the lowest credit purchase performance.
- Overall U.S. spend was up 12.5% for debit purchases. The Great Lakes (+15.7%) and Southeast (+14.0%) finished as the strongest regions for Week 7. Hawaii (+5.8%) and the Far West (+5.4%) region had the lowest debit purchase performance.
- PSCU noted its Weekly U.S. State/Territory Analysis is available at www.PSCU.com/COVID19.
The Deep Dive
PSCU said its newest “deep dive” revisits the Service sector, which makes up 16% of overall debit purchases and 23% of all credit purchases. Within the Service sector, two-thirds of the purchases (for both credit and debit) are represented in the top three segments: Professional Service & Membership Organizations, Service Providers and Contracted Services, PSCU said.
Among its findings:
- The Professional Service & Membership Organizations segment comprises healthcare and many other professional service categories, including legal, accounting, and engineering services. For the current four-week average through Week 7, year-over-year debit purchases were up for this segment by 12% and credit purchases are up 2%.
- Positively contributing to this category for credit and debit are Charitable and Social Service Organizations, along with Dentists & Orthodontists. Notable drops in this category include academic categories of elementary & secondary schools and colleges and universities.
- Service Providers, which include many insurance-related categories, have been strong, PSCU said. For the current four-week average through Week 7, debit purchases are up 21% and credit purchases are up 13%.
- Contracted Services, which include veterinary services, air conditioning, electrical and roofing services, have seen continued strong performance, especially in debit purchases. For the current four-week average through Week 7, debit purchases are up 42% and credit purchases were up 24%.
- Within the Service Sector for Week 7, Digital Goods makes up 6% of debit purchases and 4% of credit purchases. This category contains online gaming/games, books, movies and applications, and from April 2020 has seen year-over-year increases of 50% and greater through the end of 2020. For the current four-week average through Week 7, Digital Goods are up 160% for debit purchases and credit purchases are up 139%. Top merchants in the category include Apple, Microsoft/Xbox, PlayStation and Amazon.
- The balance of the Service sector, representing roughly 30% of credit and debit purchases in the sector, comprises four additional segments: Business Services, Personal Service Providers, Repair Services and Government Services. Combined results for these four categories have trended in line with consumer behaviors over the course of the pandemic, PSCU said. For the current four-week average through Week 7, these combined categories finished up 11% for debit purchases and virtually flat, up 0.1% for credit purchases.