ST. PETERSBURG, Fla.–While new data from April show the consumer price index saw its biggest jump in 13 years, credit unions continued to see strong growth in member card usage, according to new analysis released by PSCU.
The analysis also reveals the extraordinary growth being seen in purchases on Amazon.
In the May edition of its Payments Index, PSCU noted there is “cautious optimism…on the economic horizon” as the “nation moves closer toward the reality of a post-pandemic world – yet some consumer payment preferences have been forever changed.”
Key Findings
Among the “key findings” identified by PSCU in its new report:
- Card volume is being driven by strong growth in the Goods Sector (on which the new report does a “deep dive”)
- Card-present volume is improving, but card-not-present growth is leading the way.
- Credit card balances have been declining and federal stimulus payments have accelerated the paydown.
- Stimulus funds that were saved and those used to pay credit card debt represent a future opportunity
- “Revenge” spending is on the horizon as “pent-up” demand is unleashed.
Credit Card Account Balances
Overall, credit card balances (from PSCU’s same-store population) have been declining since July 2019, impacted by two key factors: lower sales volume, which has been negative for many months, and higher payment volume, enabled in part by the three federal stimulus payments, the company said.
Card Not Present
PSCU reported April 2021 CNP debit purchases represent 43% of all purchases, up nine percentage points from April 2019. For CNP credit purchases, April 2021 is 53% of overall credit purchases, up five percentage points from April 2019, PSCU said.
“As the number of fully vaccinated Americans continues to rise, state restrictions are lifted and mask mandates are rescinded, we expect to see a greater increase in Card Present activity than CNP in the coming weeks and months,” the company said.
Amazing Amazon
PSCU also pointed to the “staggering growth” of Amazon throughout 2020, driving the significant increase in Card Not Present activity.
“Helping to drive the overall Goods sector, this growth trajectory is continuing in 2021 – and may continue to grow exponentially,” PSCU said. “With the change in leadership at Amazon, there are forecasts that revenues could double by 2025 as their retail expansion adds more Card Present activity to their mix.
“For April, overall debit purchases for Amazon are up 141% as compared to the pre-pandemic baseline of 2019 and up 11% compared to April 2020. Overall credit purchases are up 76% compared to 2019 and up 20% compared to 2020,” PSCU continued. “Of the purchases with Amazon in April 2021, 55% fall within the bookstore category of the Consumer Goods sector. Debit purchases with Amazon in the Goods sector are up 115% as compared to 2019 and up 8% compared to 2020. Credit purchases with Amazon in the Goods sector are up for April 78% compared to 2019 and 20% compared to 2020.”
For the full report, go here.