RANCHO CUCAMONGA, CA (June 18, 2021) — Following sharp growth across numerous payment categories in March, spending was flat or slightly up in April. The broader availability of vaccines to more adults and now teens led to a shift in the spending categories away from online shopping and delivery services and toward in-person purchases and experiences like fuel, dining and travel. This is signaling a return to pre-pandemic “normalcy,” with anticipated strong growth in traditional retail on the horizon in the coming months. Credit unions should gear up now to take advantage of renewed opportunities for payment portfolio growth.
Here are the trends the CO-OP SmartGrowth Consulting Team are eyeing carefully this month:
#1: Payments Growth Flattens Out, But Some Bright Spots
Those spending categories that had shown significant growth during the pandemic, such as bookstores (which consists largely of Amazon.com sales), digital goods, grocery, computers and office supplies all declined in April as compared with the prior month. Others, like dining and entertainment, education and gasoline all showed strong increases. Overall, this led to a month-to-month growth trend that was generally flat as compared with March’s double-digit growth.
“The higher achievers among spending categories during the pandemic have dropped off, and that growth is now being offset by the lower achievers from the past year,” says Beth Phillips, CO-OP Director of Strategic Portfolio Growth. “Overall, that’s a positive trend, as it signals a return to pre-pandemic normalcy.”
“Retail stumbled a bit in April,” agrees John Patton, CO-OP Senior Payments Advisor. “But we expect a surge in shoppers that will be reflected in the payment spend numbers going forward.”
#2: Travel Categories are Booming
The biggest bright spots among spending categories in April were those related to tourism and recreation, reflecting a pent-up desire for leisure travel among the pandemic-weary public. Lodging showed month over month growth of 15% for credit and 17% for debit in average transaction count, and 17% and 22%, respectively in average transaction amounts. The travel category showed similar growth, as did campers and camping.
#3: Home Improvement Growth in Line with Seasonal Trends
Home improvement showed a massive jump in spend from February to March 2021 – 37% in credit transaction count and 42% in credit transaction amount. This trend remained strong in April with 13% and 11% growth, respectively.
“We typically see a bump in home improvement spending in the April timeframe,” Phillipssays. “This category was super high during the pandemic, and it’s good to see that trend continue this year.”
“A lot of folks aren’t able to buy new homes due to the current housing shortage and real estate pricing boom,” Patton agrees. “This is driving home improvement spend as people shift their focus to fixing up their existing residences.”
What’s Next?
Both Patton and Phillips are eyeing strong growth in traditional retail categories over the next few months, as social distancing restrictions ease and vaccinated shoppers return to in-person shopping. However, don’t expect online shopping and digital channels to disappear. Consumers have grown used to the convenience and safety of these channels, and Patton says they are here for the long haul.
“Merchants are moving their online shopping channels to an app-based model,” Patton says. “Netflix and the other streaming services all require card on file, which is a secure, tokenized service. Credit unions should focus on getting their members’ cards issued into digital wallets, merchant subscriptions and cards on file, to maintain top of wallet status.”
Month-Over-Month Category-Level Spending (Comparing April 2021 to March 2021)
Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year), i.e., compares April 2021 with March 2021, rather than April 2021 and April 2020.
Amazon/Bookstores
Transaction Volume (#):
Credit: Down 8%. Debit: Down 6%.
Transaction Amount ($):
Credit: Down 8%. Debit: Down 5%.
Interchange ($):
Credit: Down 8%. Debit: Down 6%.
Digital Goods
Transaction Volume (#):
Credit: Down 1%. Debit: Unchanged 0%.
Transaction Amount ($):
Credit: Down 1%. Debit: Up 2%.
Interchange ($):
Credit: Down 2%. Debit: Unchanged 0%.
Dining and Entertainment
Transaction Volume (#):
Credit: Up 7%. Debit: Up 7%.
Transaction Amount ($):
Credit: Up 10%. Debit: Up 10%.
Interchange ($):
Credit: Up 9%. Debit: Up 9%.
Education
Transaction Volume (#):
Credit: Up 7%. Debit: Up 9%.
Transaction Amount ($):
Credit: Up 7%. Debit: Up 9%.
Interchange ($):
Credit: Up 5%. Debit: Up 9%.
Gas
Transaction Volume (#):
Credit: Up 3%. Debit: Up 4%.
Transaction Amount ($):
Credit: Up 8%. Debit: Up 8%.
Interchange ($):
Credit: Up 6%. Debit: Up 6%.
Grocery
Transaction Volume (#):
Credit: Down 1%. Debit: Unchanged 0%.
Transaction Amount ($):
Credit: Down 3%. Debit: Down 2%.
Interchange ($):
Credit: Down 3%. Debit: Down 1%.
Lodging
Transaction Volume (#):
Credit: Up 15%. Debit: Up 17%.
Transaction Amount ($):
Credit: Up 17%. Debit: Up 22%.
Interchange ($):
Credit: Up 17%. Debit: Up 22%.
Medical
Transaction Volume (#):
Credit: Up 4%. Debit: Up 5%.
Transaction Amount ($):
Credit: Up 6%. Debit: Up 9%.
Interchange ($):
Credit: Up 5%. Debit: Up 8%.
Retail
Transaction Volume (#):
Credit: Down 1%. Debit: Down 2%.
Transaction Amount ($):
Credit: Unchanged 0%. Debit: Unchanged 0%.
Interchange ($):
Credit: Unchanged 0%. Debit: Unchanged 0%.
Travel
Transaction Volume (#):
Credit: Up 11%. Debit: Up 10%.
Transaction Amount ($):
Credit: Up 20%. Debit: Up 22%.
Interchange ($):
Credit: Up 20%. Debit: Up 21%.
Computers
Transaction Volume (#):
Credit: Down 5%. Debit: Down 5%.
Transaction Amount ($):
Credit: Down 8%. Debit: Down 3%.
Interchange ($):
Credit: Down 8%. Debit: Down 5%.
Office
Transaction Volume (#):
Credit: Down 4%. Debit: Down 3%.
Transaction Amount ($):
Credit: Down 2%. Debit: Down 2%.
Interchange ($):
Credit: Down 2%. Debit: Down 1%.
Campers & Camping
Transaction Volume (#):
Credit: Up 16%. Debit: Up 20%.
Transaction Amount ($):
Credit: Up 21%. Debit: Up 24%.
Interchange ($):
Credit: Up 20%. Debit: Up 22%.
Home Improvement
Transaction Volume (#):
Credit: Up 6%. Debit: Up 8%.
Transaction Amount ($):
Credit: Up 9%. Debit: Up 13%.
Interchange ($):
Credit: Up 8%. Debit: Up 11%.
More information on the CO-OP SmartGrowth Consulting Team can be found here.
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.
Bill Prichard, APR
Director, Public Relations
CO-OP Financial Services
(909) 532-9416
Bill.Prichard@coop.org
