First Data’s Volume Growth Slowed in the First Quarter, but Brick-and-Mortar Topped E-Commerce

First-quarter growth in leading merchant processor First Data Corp.’s portfolios lagged growth posted in the preceding two quarters, but in a rare event physical merchants posted higher sales increases than their online counterparts.

In its latest SpendTrend report, First Data says total payment card spending at U.S. merchants on its books for a least a year grew 2.3% year-over-year in the first quarter, down from 2.8% in 2018’s fourth quarter and 4.9% in the third.

“There has been a steady slowdown in spending through the last three quarters,” the report says. “1Q19 was especially turbulent, as February reeled from the five-week government shutdown, and a barrage of winter storms. But, consumer spending rebounded strongly in March to levels not seen since August 2018. This helped salvage 1Q19 results.”

The report does not give actual dollar or transaction numbers. New York City-based First Data, which has a deal to be acquired by Fiserv Inc. for $22 billion, processed $2.3 trillion in U.S. payment volume last year from 84 billion transactions.

PIN-debit was the fastest-growing of three major card types First Data reported, with first-quarter volume up 4.1%. Credit card spending grew 2.5% while signature debit volume grew only 1.2%.

One surprise the report notes is a big slowdown in e-commerce growth. In 2018’s first quarter, online volume grew more than 8% while physical stores posted a growth rate of just over 3%. But a year later, same-store volume at physical merchants grew 2.4% while e-commerce increased only 2.1%. “Even though e-commerce has consistently outpaced the growth at brick-and-mortar stores, it too has had a steady decline in growth over the last five quarters,” the report says.

The hottest three merchant categories in the first quarter were computer and software stores, where volume grew 11.3%, steamship and cruise lines, up 10.2%, and quick-service restaurants, up 8.8%.