ST. PETERSBURG, Fla.—Consumer purchasing activity is softening even as inflation shows signs of contracting, PSCU is reporting.
While overall payment growth is still positive, April 2023 data from the PSCU Payments Index revealed extended weakening of consumer spend and lower average purchases for both credit and debit cards. The study also shows more of those purchases are being made via tap-to-pay plastic, according to the company.
“While contactless adoption is still behind other regions, we expect that contactless card volume in the U.S. will continue to grow quickly,” said David Albertazzi, director, retail banking and payments at Aite-Novarica Group, in a statement accompanying release of the new data. “The acceptance infrastructure is already available, with Apple Pay now accepted at more than 90% of U.S. retailers. The recent introduction of SoftPOS, aka Tap to Pay, enables merchants to accept contactless payments on a regular smartphone. SoftPOS will further drive the migration from cash to card, as well as the shift to contactless as the preferred payment method at the point of sale.”
Key Takeaways
According to PSCU, key takeaways from the May report include:
- Transactions in April grew at a higher rate than purchase dollars, for both credit and debit cards, for the second consecutive month. For April, both credit and debit transactions were up 4% year over year. Credit purchases were up 2% and debit purchases were up 3%. For credit purchases, the largest contributor to growth was the Services sector ( one percentage point of growth) while the Goods sector offset that with a 0.8 percentage point reduction. For debit purchases, three sectors generated the highest growth, with Restaurants, Money Services and Food & Groceries each contributing 0.8 percentage points of growth, PSCU said. Debit purchases were offset by a reduction of 0.6 percentage points in Gasoline.
- Growth in contactless “tap-and-go” transactions remained strong in April, with credit transactions up 9.6 percentage points and debit transactions up 11.7 percentage points compared to a year ago. Growth in “tap-and-go” was strongest in the food-related sectors of Restaurants and Grocery Stores, as well with the younger age demographics of Gen Z and Millennials.
- Growth in non-discretionary spending slowed on both credit and debit cards with credit up 1% and debit up 2% year over year. PSCU noted discretionary spending grew at a greater rate than non-discretionary spending, with credit up 4% and debit up 8%. Transaction growth on credit cards was up 4% each for discretionary and non-discretionary transactions. Transaction growth on debit cards was up 12% for discretionary and up 3% for non-discretionary transactions.
- The credit card delinquency rate for April finished at 1.81%, above the March 2019 pre-pandemic level by 0.13%, PSCU reported. Total credit card balances were up 13.9% for April compared to a year ago, while the average credit card balance for active accounts was $2,946, up 8.7% (or $235) year over year.
The full report is available for download here.