By: PSCU/Co-op Solutions
The April edition of the Payments Index marks the three-year anniversary of our monthly report. We hope the evolution of these monthly insights continues to help our credit unions navigate the constantly evolving financial landscape.
Consumer spending remained steady throughout March, mainly with debit cards over credit cards, amidst other strong economic indicators that may dampen near-term Fed rate cuts. This month’s Deep Dive revisits digital payments, which show the continued rise of both contactless and tokenized credit transactions, along with contactless debit transactions, compared to traditional physical card payments.
After a downwardly revised February result (104.8), the Consumer Confidence Index was mainly unchanged in March at 104.7. The University of Michigan’s Index of Consumer Sentiment increased 2.5 points to 79.4 for March. Both surveys showed positive consumer sentiment about current economic conditions. Job growth remained brisk, with 303,000 jobs created. The U.S. Bureau of Labor Statistics reported that the overall unemployment rate for March dropped slightly to 3.8%, or 6.4 million people.
Key Takeaways
Key takeaways from the April 2024 edition of the Payments Index include:
- For March, growth rates for debit activity continued to remain stronger than growth in credit activity. Debit purchases were up 6.6%, while credit purchases were down 0.3%. Debit transactions were up 5.8% and credit transactions were up 2.2% year over year.
- The Consumer Price Index (CPI-U) increased 0.4% in March, while the 12-month rate of inflation was 3.5%. Shelter and Gasoline again contributed to more than half of the increase. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.4% from February, putting the 12-month Core CPI index at 3.8%.
- As digital payment transactions continue to grow, digital payment purchases represented over half of overall purchases for both credit (54%) and debit (51%) cards. While physical card activity softened, contactless cards “tap and go” activity continued to grow, now representing 19% of all credit card transactions and 14% of all debit card transactions, up from 12% and 9%, respectively, in 2023. At the same time, EMV transactions declined, representing 34% of credit transactions, down from 40% in 2023. Debit EMV chip transactions represented 35% of all transactions, down from 43% in 2023. The percentage of overall transactions that are mag stripe, or swiped, is on the decline for credit cards (only 3% of all transactions, down from 5% in 2023), while debit has remained the same for 2024 and 2023, representing 10% of overall debit card transactions.
- Apple Pay is maintaining its market share dominance in the digital wallet space, representing 93% of digital wallet debit transactions and 89% of digital wallet credit transactions. Of the three primary digital wallet providers (Apple Pay, Google Pay and Samsung Pay), Apple Pay has the greatest percentage of its respective wallet services in a Card Not Present (CNP) environment. 40.4% of all Apple Pay debit transactions are CNP and 37.3% of all Apple Pay credit transactions are CNP.
- Balance transfer usage was down during what is traditionally the seasonal peak month of March. The growth in the number of balance transfers was down 41% year over year, impacted by factors including rising credit card delinquency rates, liquidity concerns and higher interest rates. The average amount of balance transfers was up 6%, or $236, at $4,187.
Looking ahead, there will be additional scrutiny on economic perceptions and actions with the upcoming presidential election. For example, while there is normal seasonal growth in average gasoline prices, the year-to-date increase for 2024 was higher (14%) compared to the same year-to-date increase for 2023 (8%). Separately, the White House is proposing new legislation to reduce or eliminate student loan debt for an estimated 30 million Americans. We will continue to monitor these trends and their impact on consumers throughout this year.
As we continue to integrate PSCU/Co-op Solutions, we have combined our monthly payment trends analysis into a single monthly publication to provide our credit unions with a consolidated report and an optimal experience. Starting this month, we will incorporate content from Co-op Solutions’ monthly Payment Trends report into the Payments Index, which will continue to be published monthly. Please note that when our credit union populations are reviewed and updated each year for this publication, some metrics may have nominal changes from previously posted results.
