Chase’s Merchant Volume Rose 5% Despite a ‘Tale of Two Cities’ First Quarter

JPMorgan Chase & Co., parent company of the nation’s biggest bank-owned merchant acquirer, managed to pull off a 5% increase in processing volume in the first quarter despite the restrictions on economic activity that took force in many states in the second half of March to control the Covid-19 pandemic.

The New York City-based banking firm on Tuesday reported merchant-processing volume of $374.8 billon versus $356.5 billion a year earlier. And sales volume on the bank’s credit cards—Chase is the nation’s largest general-purpose card issuer—plus its debit cards rose 4% to $266 billion.

“It might be an obvious point, but the quarter was really a tale of two cities: January and February, and then March when the crises started to unfold,” JPMorgan Chase chief financial officer Jennifer A. Piepszak said on the company’s first-quarter earnings conference call. “In March we saw a rapid decline in spend initially in travel and entertainment, which then spread to restaurants and retail as social-distancing protocols were implemented more broadly.” 

But, as other firms have noted, some merchants experienced big boosts in sales. Chase’s merchant unit briefly saw a year-over-year volume jump of slightly over 100% at its brick-and-mortar supermarket clients during March. Similarly, Chase cardholders for a time increased spending by about 75% at supermarkets, wholesale clubs, and discount stores “as people stocked up on provisions, but even that is now starting to normalize,” Piepszak said.

By month’s end, Chase cardholders had reduced T&E spending by nearly 100% on a year-over-year basis, according to a chart in Chase’s earnings report. In the merchant unit, volume at brick-and-mortar merchants except supermarkets was off by almost 50% from a year earlier, and even e-commerce volume was down close to 10%. 

Warning of “the likelihood of a fairly severe recession,” JPMorgan Chase chairman and chief executive Jamie Dimon said in a statement that the company added $6.8 billion to its credit reserves in the first quarter.