CO-OP Payments Trends Report (Spending Data from August 1-31)
9/16/2021 – RANCHO CUCAMONGA, California – As the U.S.’s post-pandemic recovery continues, consumers are beginning to shift their purchasing behavior from debit to credit, while increasing their spending in retail and specialty merchant categories like sports and recreation.
Those are a few of the latest trends CO-OP Financial Services has observed among its member credit union portfolios. Despite a mixed bag of economic data in August, consumers seem generally optimistic about their financial prospects, and are spending early and often in certain categories to offset shortages due to lingering supply chain issues.
The U.S. Labor Department reported a continued decline in weekly unemployment claims, dropping to a pandemic low of 310,000 in the week ending September 4, from a revised figure of 345,000 the week before. Some of this drop can be attributed to the reduction in jobless aid programs, as two federal programs covering contract and freelance workers, and people unemployed for over six months ended. Indeed, the pace of hiring slowed substantially in August, even while the unemployment rate dropped to 5.2%.
Yet, despite the fitful recovery and ongoing worries about the Delta variant, spending continues to grow across multiple categories.
Spending trends to watch this month include:
#1: Shift from Debit to Credit is Happening Now
The anticipated resurgence of credit finally seems to be taking hold, with August credit spending trends showing major increases month-over-month in multiple categories including online sales, education, gas, grocery, retail and computers. In debit, several of these categories, such as retail and grocery, showed more modest increases or even declines for the month.
“The shift to credit is happening now, as people are feeling more comfortable with their financial situations than they did a year ago,” said John Patton, CO-OP Senior Payments Advisor. “Consumers used their stimulus payments from earlier this year to pay down credit card balances, as well as taking advantage of low interest rates to refinance their balances into installment loans. They kept their lines open, and are now opening their wallets to take advantage of that additional availability.”
#2: Retail Picks Up Steam
Boosted by an active back-to-school sales season, retail spend had strong growth in August – especially in credit, which grew by 18% in transaction count and 13% in transaction amount month over month. In comparison, retail debit spend was basically flat for the month.
Certain specialty categories saw big lifts in July and August, such as sports/recreation, which saw a 28% lift in transaction count in July and an additional 8% in August, with return of school, club and collegiate sports even in modified form. This includes several merchant categories, such as sporting goods stores, shoe stores, sports apparel, sporting and recreational camps, and recreational services.
#3: Ecommerce Spending Remains Hot
One ongoing lesson from the pandemic is that consumers have become very comfortable with shopping online. From eCommerce to newer channels like Buy Online, Purchase In Store (BOPIS), consumers who had resisted making online purchases for any number of reasons have flocked to the channel in droves.
That trend continued in August, as Amazon/bookstore sales increased by double-digits month over month in both credit and debit. Year over year, despite massive growth in the eCommerce channel in 2020, the category is up again by 9% by transaction amount in credit for 2021.
What Credit Unions Should Do Now
According to Beth Phillips, CO-OP Director of Strategic Portfolio Growth, credit unions should take advantage of their members’ increasing use of credit this fall, with an eye toward an early holiday shopping season.
“We recommend ramping up your rewards and incentives now, before your members begin their holiday shopping,” said Phillips. “Look at the data to see where your members are spending, and target those categories and merchants with special incentives to position your card top of wallet. Plus, begin planning for post-holiday balance growth opportunities now.”
Since eCommerce is here to stay, it’s also important to allow members easy access to their card accounts through their preferred digital wallet apps. CO-OP Digital Card Issuance allows members to access their digital credit and debit credentials instantly, providing a seamless, touchless and secure process through the credit union’s mobile app. And with CO-OP Digital Wallets, credit unions can remain top of wallet by allowing members to use their debit and credit cards with most popular wallet apps including Google Pay, Apple Pay, Samsung Pay, Fitbit Pay and Garmin Pay.
Month-Over-Month Category-Level Spending (Comparing August 2021 to July 2021)
Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year), i.e., compares August 2021 with July 2021, rather than August 2021 and August 2020.
Amazon/Bookstores
Transaction Volume (#):
Credit: Up 12%. Debit: Up 6%.
Transaction Amount ($):
Credit: Up 13%. Debit: Up 10%.
Interchange ($):
Credit: Up 25%. Debit: Up 11%.
Digital Goods
Transaction Volume (#):
Credit: Down 2%. Debit: Down 7%.
Transaction Amount ($):
Credit: Unchanged 0%. Debit: Down 6%.
Interchange ($):
Credit: Up 3%. Debit: Down 7%.
Dining and Entertainment
Transaction Volume (#):
Credit: Up 4%. Debit: Down 3%.
Transaction Amount ($):
Credit: Up 1%. Debit: Down 4%.
Interchange ($):
Credit: Up 2%. Debit: Down 4%.
Education
Transaction Volume (#):
Credit: Up 49%. Debit: Up 44%.
Transaction Amount ($):
Credit: Up 52%. Debit: Up 47%.
Interchange ($):
Credit: Up 44%. Debit: Up 42%.
Gas
Transaction Volume (#):
Credit: Up 25%. Debit: Down 5%.
Transaction Amount ($):
Credit: Up 20%. Debit: Down 4%.
Interchange ($):
Credit: Up 36%. Debit: Down 4%.
Grocery
Transaction Volume (#):
Credit: Up 25%. Debit: Down 4%.
Transaction Amount ($):
Credit: Up 24%. Debit: Down 4%.
Interchange ($):
Credit: Up 46%. Debit: Down 4%.
Lodging
Transaction Volume (#):
Credit: Down 8%. Debit: Down 10%.
Transaction Amount ($):
Credit: Down 11%. Debit: Down 13%.
Interchange ($):
Credit: Down 11%. Debit: Down 14%.
Medical
Transaction Volume (#):
Credit: Down 1%. Debit: Down 6%.
Transaction Amount ($):
Credit: Down 4%. Debit: Down 8%.
Interchange ($):
Credit: Down 4%. Debit: Down 8%.
Retail
Transaction Volume (#):
Credit: Up 18%. Debit: Down 2%.
Transaction Amount ($):
Credit: Up 13%. Debit: Down 1%.
Interchange ($):
Credit: Up 21%. Debit: Down 2%.
Travel
Transaction Volume (#):
Credit: Down 2%. Debit: Down 5%.
Transaction Amount ($):
Credit: Down 17%. Debit: Down 16%.
Interchange ($):
Credit: Down 17%. Debit: Down 16%.
Computers
Transaction Volume (#):
Credit: Up 42%. Debit: Up 4%.
Transaction Amount ($):
Credit: Up 28%. Debit: Up 3%.
Interchange ($):
Credit: Up 40%. Debit: Up 3%.
Office
Transaction Volume (#):
Credit: Down 1%. Debit: Down 4%.
Transaction Amount ($):
Credit: Up 2%. Debit: Down 4%.
Interchange ($):
Credit: Up 3%. Debit: Down 6%.
Campers & Camping
Transaction Volume (#):
Credit: Down 10%. Debit: Down 18%.
Transaction Amount ($):
Credit: Down 3%. Debit: Down 9%.
Interchange ($):
Credit: Down 1%. Debit: Down 12%.
Home Improvement
Transaction Volume (#):
Credit: Up 8%. Debit: Down 11%.
Transaction Amount ($):
Credit: Down 1%. Debit: Down 13%.
Interchange ($):
Credit: Up 4%. Debit: Down 13%.
More information on the CO-OP SmartGrowth Consulting Team can be found here.
