Debit Use And Contactless Payments Are up After a Year of Covid, PSCU Notes

Debit is the most preferred payment option among consumers and contactless payments have doubled in the year since the declaration of the Covid-19 pandemic. That’s the assessment from the “Tracking Transaction Trends” report for the week ending March 7 from PSCU, a credit union service organization.

Debit card spend for the week, compared to the week ending March 8, 2020, is up 18% and credit card spend is up 14.6%. PSCU bases the report on data from its member credit unions. With a full year having passed since Covid’s effects began to be felt, PSCU says this is its final weekly report. It will return as a monthly report.

Highlights from the past 12 months show debit is a preferred payment choice. “After an initial drop, year-over-year debit transactions returned to positive growth in June 2020,” the report says. “For the June 2020 through March 11, 2021, timeframe, debit transactions are up 3%. Debit purchases over that time span have been up 17%. During the peak of the pandemic in 2020, year-over-year debit purchases were negative for only three weeks in total. Credit transactions came close to being flat year over year back in October 2020. Since that time, credit transactions are down 2%. Credit purchases are up 4% year over year since October 2020.”

And, as others have reported, contactless use grew significantly in the past year. For debit, contactless transactions’ share doubled from 8% in January 2020 to 17% in March 2021; for credit, it increased from 6% to 13% over the same time span.

“While debit and credit spend growth both finished strong in week 10, we have now reached the one-year mark of Covid-19’s impact on consumer spending, and year-over-year comparisons are now influenced by the onset of the pandemic,” Glynn Frechette, senior vice president of Advisors Plus Consulting at St. Petersburg, Fla.-based PSCU. “With the recent approval of the third federal relief bill and funds beginning to arrive, a significant positive impact on consumer spending and debit card purchase growth is likely to continue.”

PSCU also noted that card-not-present (CNP) activity reflected the shift in consumer spending in the past year. In the first three months of 2020, CNP transactions were 25% of total debit transactions. For the April 2020 through March 2021 period, the figure was 31%. Credit CNP transactions accounted for 27% of all credit transactions in 2020’s first quarter and now account for 45% of total credit transactions.

For Amazon in particular, the move to more online spending processed by PSCU was significant. Debit experienced a monthly peak in May 2020, with purchase volume up 126% year-over-year and averaging at least 73% since then. Credit also peaked in May, with purchase volume up 58% and averaging at least 47% since then.

Consumers also shifted what they were buying as the impact of the pandemic hit home. For consumer goods, debit purchases are up 34% and credit purchases are up 20% from April 2020. In the grocery segment, debit purchases are up11% and credit up 15%.