A Return to ‘Normalcy’: Familiar Payments Trends Take Hold

CO-OP Payments Trends Report (Spending Data from March 1-31)

As the COVID-19 vaccine rollout continues to progress, enabling the U.S. economy to slowly but surely reopen, consumer spending patterns are finally beginning to take on a familiar hue. Here are a few of the encouraging trends we are watching this month:

#1: Consumers Shift from Online to In-person Shopping

March saw small declines month-over-month in some eCommerce merchant classifications, like bookstores (which consists largely of Amazon.comsales). However, these drops were much less than those seen in the prior month, and other categories like retail and digital goods showed slight upticks.

“We’re seeing lifts in transaction counts, amounts and interchange, as the post-holiday declines have now dissipated,” said Beth Phillips, CO-OP Director of Strategic Portfolio Growth. “Whereas there were some small declines in Amazon, computers and office equipment, consumers are beginning to spend their retail dollars elsewhere, including in physical stores as pre-pandemic ‘normal’ spending habits begin to take hold.”

“Small businesses and shops are rebounding,” said John Patton, CO-OP Senior Payments Advisor. “It will be interesting to monitor which merchant classifications see the sharpest increases in the coming months.”

#2: Grocery Purchases Stabilize as Consumers Dine Out

Whereas grocery spend in both debit and credit stayed essentially flat month-over-month in March, dining and entertainment showed double-digit increases. According to Phillips, this indicates a reversion back to the pre-pandemic norm.

“Grocery transaction counts were virtually the same in March compared with February, with amounts down slightly,” said Phillips. “Coupled with the strong growth in restaurant spend, this is a very good sign that dining behaviors are beginning to normalize and consumers are growing more comfortable visiting restaurant establishments again. This is a trend we expect to continue to see in the coming months.”

#3: Travel and Tourism Prepare to Take Flight

Travel and lodging spend were up significantly in March month-over-month as the combination of access to vaccines, customary spring cabin fever and the public’s desire to escape a year of lockdowns motivated people to take trips. For both debit and credit, month-over-month transaction amounts and interchange lifts approached nearly 30%.

“People are going to start traveling and moving around the country again,” said Patton. “Both for recreation, as well as to take new jobs as businesses begin reopening. For credit unions, this means it’s time to dust off and promote your travel rewards programs to ensure you capture your members’ primary financial relationships in these spending categories.”

Month-Over-Month Category-Level Spending (Comparing March 2021 to February 2021)

Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year), i.e., compares March 2021 with February 2021, rather than March 2021 and March 2020.

Amazon/Bookstores
Transaction Volume (#):
Credit: Down 9%. Debit: Down 5%.
Transaction Amount ($):
Credit: Down 8%. Debit: Down 4%.
Interchange ($):
Credit: Down 7%. Debit: Down 5%.

Digital Goods
Transaction Volume (#):
Credit: Up 2%. Debit: Up 3%.
Transaction Amount ($):
Credit: Up 2%. Debit: Up 5%.
Interchange ($):
Credit: Up 1%. Debit: Up 4%.

Dining and Entertainment
Transaction Volume (#):
Credit: Up 10%. Debit: Up 10%.
Transaction Amount ($):
Credit: Up 14%. Debit: Up 14%.
Interchange ($):
Credit: Up 12%. Debit: Up 13%.

Education
Transaction Volume (#):
Credit: Up 10%. Debit: Up 14%.
Transaction Amount ($):
Credit: Up 9%. Debit: Up 14%.
Interchange ($):
Credit: Up 7%. Debit: Up 13%.

Gas
Transaction Volume (#):
Credit: Up 5%. Debit: Up 5%.
Transaction Amount ($):
Credit: Up 10%. Debit: Up 11%.
Interchange ($):
Credit: Up 7%. Debit: Up 8%.

Grocery
Transaction Volume (#):
Credit: Unchanged 0%. Debit: Unchanged 0%.
Transaction Amount ($):
Credit: Down 3%. Debit: Down 1%.
Interchange ($):
Credit: Down 3%. Debit: Unchanged 0%.

Lodging
Transaction Volume (#):
Credit: Up 22%. Debit: Up 24%.
Transaction Amount ($):
Credit: Up 23%. Debit: Up 29%.
Interchange ($):
Credit: Up 23%. Debit: Up 30%.

Medical
Transaction Volume (#):
Credit: Up 7%. Debit: Up 8%.
Transaction Amount ($):
Credit: Up 9%%. Debit: Up 13%.
Interchange ($):
Credit: Up 8%. Debit: Up 13%.

Retail
Transaction Volume (#):
Credit: Unchanged 0%. Debit: Down 2%.
Transaction Amount ($):
Credit: Up 2%. Debit: Up 3%.
Interchange ($):
Credit: Up 2%. Debit: Up 2%.

Travel
Transaction Volume (#):
Credit: Up 2%. Debit: Up 1%.
Transaction Amount ($):
Credit: Up 4%. Debit: Up 9%.
Interchange ($):
Credit: Up 4%. Debit: Up 9%.

Computers
Transaction Volume (#):
Credit: Down 6%. Debit: Down 4%.
Transaction Amount ($):
Credit: Down 7%. Debit: Unchanged 0%.
Interchange ($):
Credit: Down 7%. Debit: Down 2%.

Office
Transaction Volume (#):
Credit: Down 2%. Debit: Down 1%.
Transaction Amount ($):
Credit: Down 3%. Debit: Down 2%.
Interchange ($):
Credit: Down 3%. Debit: Down 1%.

Campers & Camping
Transaction Volume (#):
Credit: Up 19%. Debit: Up 22%.
Transaction Amount ($):
Credit: Up 28%. Debit: Up 29%.
Interchange ($):
Credit: Up 28%. Debit: Up 29%.

More information on The CO-OP SmartGrowth Consulting Team can be found here.

About CO-OP Financial Services

CO-OP Financial Services is a payments and financial technology company whose mission is ensuring the success of the credit union movement. CO-OP payments solutions, engagement services and strategic counsel help credit unions optimize member experiences to consistently provide seamless, personalized multi-channel offerings, while delivering secure, sophisticated fraud mitigation service. For more information, visit www.co-opfs.org.