New Holiday Spending Analysis Reveals Key Payments Trends For Credit Union Issuers
Strategic Link partner CO-OP Financial Services’ recently released an in-depth analysis of consumer card transaction data collected from Thanksgiving Day through Cyber Monday 2021.
Here’s a breakdown of the findings:
Regarding holiday gift shopping, CO-OP’s analysis revealed several important trends. Chief among them, debit purchases on Amazon declined for the third year in a row, suggesting consumers are more comfortable shopping at this major online retailer with a credit card. While the number of credit transactions only outpaced debit transactions by 2%, credit generated a 17% year-over-year increase in interchange vs. debit’s 10% increase.
Consumer preference for credit cards this holiday extended beyond Amazon. Debit card purchases in grocery stores, for instance, did not increase at all compared to 2020. Credit card purchases in grocery stores, on the other hand, increased 82%. Retail purchases via credit were up 42%, whereas debit purchases in the retail environment were up just 4%.
The preference for credit cards may be due to several factors, including the scaling back of government stimulus. This can also be seen in consumer use of emerging credit access tools, such as buy now pay later (BNPL). On Cyber Monday alone, BNPL providers reported a 21% year-over-year increase in revenue.
However, average transaction totals processed by CO-OP were similar across debit and credit at roughly $47 per transaction regardless of the card type. This indicates consumers perceive additional benefits to credit card use beyond access to credit, such as rewards and/or fraud protection.
“Data on consumer card spending continues to underscore the value of offering members access to multiple payment vehicles,” said Beth Phillips, Managing Director, Strategic Portfolio Growth, for CO-OP. “When the go-to debit card isn’t a viable option — maybe there’s been a job loss or change in personal cash flow — members still want to rely on their trusted credit union for day-to-day money movement. Whether it’s a credit card, a peer-to-peer network, or a BNPL-style solution, it’s vital to offer members different ways to transact. That’s how credit unions maintain primary financial relationships during the financial disruptions everyone experiences at one time or another, pandemic or not.”
Travel Spending Rebounds Dramatically Over the Thanksgiving Holiday
CO-OP’s analysis shows the volume of gas purchases up 101% year-over-year; lodging up nearly 50%; grocery purchases up 82%; and other travel transactions up 92%. The “other travel” segment includes things like airline, car rental, travel agency, cruise line, toll, and parking transactions. All combined travel segments were up an impressive 98%in volume and 115% in spend.
Travel spending overshadowed online gift shopping, which saw only slight increases as compared to 2020 in CO-OP’s analysis. It’s an observation echoed by Adobe Analytics, which reported Black Friday and Cyber Monday decreases in year-over-year sales.
“It’s clear credit union members were anxious to rejoin their families and friends in celebration of the holiday this year, often prioritizing getting together over online shopping,” said Phillips. “However, the dramatic increase in travel spending was a welcome rebound for credit unions. Travel activity alone yielded an aggregate interchange increase of more than 431% for CO-OP’s card issuing partners.”
It was evident hosts were entertaining their guests outside the home, as well, with restaurants and recreation categories experiencing significant activity. Dining purchase totals were up 60% on credit and 46% on debit year-over-year. Recreation purchases were up as well, with a 27% increase on credit and 14% on debit.
Computer, Retail, and Digital Goods Experience Bumps in Activity
Although Black Friday and Cyber Monday sales growth remained on the smaller side, CO-OP analysis revealed a few merchant category winners: computers were up 64%, retail up 42%, and digital goods up 40%.
“The increase in computer sales is interesting,” said Phillips. “We’re likely seeing a couple of trends play out there, namely fears over lingering chip shortages and the continuation of work- and learn-from-home circumstances in various pockets throughout the country.”