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If the nation’s second-largest bank is any indication, total consumer payments are booming despite the pandemic, while digital alternatives are gaining ground fast, in part because of the pandemic. Bank of America Corp. reported early Monday spending by consumer customers in January rose 17% compared to January last year, resulting in the second-highest monthly volume of consumer spending the bank has ever seen.
The spending amounted to $335 billion from approximately 67 million customers, and embraced cash and check spending as well as credit and debit card usage, plus peer-to-peer transfers, automated clearing house activity, wires, and bill payments.
But a steady movement by consumers to digital payments is clearly coming at the expense of cash and checks, where volume fell 7% in January, the big bank reported. P2P payments, where paper payment methods can be especially prominent, continue to move to Zelle, a network in which BofA is a major investor. Here, the bank reported payments by Zelle exceeded those by check last year, and were 20% higher last month year-over-year
All told, BofA’s consumer clients performed payments totaling $3.8 trillion in 2021, fully 24% higher than in the pre-pandemic year of 2019. This volume included an all-time high in the Christmas quarter, exceeding $1 trillion, up 28% from the same period in 2019.
Payments observers have long predicted infection fears stemming from the Covid-19 pandemic—including its recent Omicron and Delta waves—would accelerate a consumer trend away from cash and checks and toward digital methods, a trend BofA is clearly seeing in its latest numbers. And the trend appears only to be picking up momentum. Spending on credit and debit cards last month totaled $65 billion, up 16% from last year, while credit card volume alone grew 28%. In part, the increase came as consumers ventured back into travel and dining out. Travel spending on credit cards last month grew 120% compared to January last year, the bank said without disclosing the dollar volume.
BofA’s numbers include activity by deposit-holding or credit card-using customers in the bank’s retail, preferred, small-business, and wealth-management categories. The Charlotte, N.C.-based bank said it plans to report consumer spending trends each month from now on.
