Consumers charge ahead with card spending

A new report from the Electronic Transactions Association and The Strawhecker Group revealed that U.S. consumers increased usage of electronic payment options at a rapid clip last year, outpacing overall growth in gross domestic product.

According to the U.S. Spending Snapshot, published this week by the ETA and TSG, consumer spending with credit and debit cards and mobile wallets grew by 7.2 percent year-over-year for the third quarter of 2018, more than doubling the 3.5 percent year-over-year growth recorded for the third quarter of 2017. This follows a report in October that put year-over-year growth in electronic payments spending at 6.9 percent for the second quarter of 2018.

To put these numbers into perspective, the U.S. Department of Commerce reported in December that real GDP grew by 4.2 percent in Q3 2018 compared to 3.2 percent year-over-year growth in Q3 2017.

“The third quarter of 2018 proved to be another strong period for electronic payments, as U.S. consumers continued to see economic benefits from tax reform and strong personal income growth,” said Jared Drieling, senior director of business intelligence at TSG.

“Our latest Spending Snapshot is indicative of consumer trust and confidence in their use of electronic payment products,” added Amy Zircle, ETA vice president of industry affairs. Some of the year-over-year increase can be attributed to increases in gas prices, which outpaced price increases in other spending categories. Electronic payments spend at gas stations rose 16.9 percent year-over-year, outpacing the 9.6 percent year-over-year growth charted for the third quarter of 2017, ETA and TSG reported. Other merchant verticals charting healthy growth in Q3 2018 included general merchandise and electronics stores.

Merchants in southern states saw robust year-over-year growth in electronic payments in the third quarter of last year. In the Southwest, electronic payments rose by 9.15 percent and merchants in the Southeast saw electronic payments growth of 7.66 percent. Both outperformed electronic payments growth in the Plains (6.73 percent), Far West (5.84 percent), Great Lakes (7.24 percent), Midwest (6.82 percent) and New England (7.46 percent). Only merchants in the Rocky Mountain States saw more growth in electronic payments (8.15 percent), ETA and TSG said.

The ETA/TSG U.S. Spending Snapshot is a quarterly analysis of actual consumer spending at 3.7 million U.S. merchants with $1 trillion in combined annual card transactions. The ETA/TSG data analysis comes on the heels of mixed reports on consumer spending during the year-end holiday season. The National Retail Federation said this month its analysis suggested consumer spending (across all types of payments) rose in 2018 a meager 2.9 percent over the year-end 2017 holiday shopping season. Mastercard, meanwhile, reported in late December that year-end 2018 holiday spending across all payment types rose by 5.1 percent over 2017 spending.

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