Out of the gloom surrounding the U.S. economy since the onset of Covid-19 comes a report that consumer spending on credit and debit cards is not only robust, but also stronger than it was even two years ago.
Dollar volume on payment cards in July was 21% higher than in July 2020, according to data released on Wednesday by The Strawhecker Group, an Omaha-based payments consultancy. That may not be surprising, given the slump induced by lockdowns and other measures adopted nationwide a year ago. But, in a sign of economic recovery, the increase over the same month in 2019 was nearly 20%, expressed as a compound annual growth rate, according to the Strawhecker report.
The Strawhecker firm attributes the robust growth to the rise in e-commerce spending brought on by the pandemic, but also to consumers’ appetite for streaming services and a shift in spending from checks to cards. The firm also cites a study it conducted with Visa that indicated a movement among consumers away from cash, compared to cash usage before Covid struck.
“I would say it’s impressive growth,” Mike Strawhecker, president of The Strawhecker Group, tells Digital Transactions News. He adds the rationale behind the increase is “multipronged.” He underscores the role of e-commerce spending but adds that business spending—brought on by companies turning to cards to speed up payments—also played a prominent role in the overall increase.
The accelerating conversion of cash and checks to cards will particularly benefit the construction, business-to-business, personal services, and utility industries, the firm forecasts. A key sector in the personal-service category is landscaping.
The Strawhecker data, managed by the firm’s AIM (Acquiring Industry Metrics) platform, is derived from almost 4 million small and large businesses in more than 250 industries, the firm says, and includes transaction information from almost half of all U.S. card-accepting merchants.