Digital Transactions Authoritative, insightful and timely information for payments professionals
As the U.S. economy moves farther from the worst of the Covid pandemic, credit and debit card spending may be stabilizing, according to new data from The Strawhecker Group, a payments advisory and research firm.
Released as part of the AIM Headline Report series, the Growth & Inflation Analysis 2022 report suggests 2022 is shaping up as a year of correction. While acquirers’ small-business portfolios boomed in 2021 when compared to a lackluster 2020, similar growth is unlikely in 2022.
“The trends suggest that an acquirer’s SMB portfolio may not grow at a similar rate as 2021 growth levels,” Josh Istas, senior director of analytics at Omaha, Neb.-based Strawhecker, says in an email to Digital Transactions News. “The positive influences (for example depressed 2020 volume activity) supporting higher 2021 growth rates are likely to stabilize in 2022.” Higher average ticket sizes in 2021 also helped increase the average account size for acquirers. Strawhecker defines average account size as the total per merchant monthly credit/debit transaction volume less returns.
The forecast is not certain because e-commerce continues to “show strong growth differential compared to 2021, suggesting continued growth in 2022,” Istas says. “Said another way, e-commerce merchants are not experiencing the same deceleration in growth observed within the overall U.S. SMB market.”
The other factor is inflation. While federal agencies try to get it under control, rising consumer costs would affect credit and debit spending. “Continued increases in the inflation rate may impact this forecast positively due to an increase in the average ticket, however, inflation, decrease in real income, and other economic trends may cause a slowdown in transaction growth,” the report says.
Acquirers will want to pay attention to their volume and merchant activity, Istas says. “If there is a decrease in merchant account size or volume, merchant acquirers need to identify strategies to maintain revenue growth in spite of spending growth headwinds,” he says. Examples might be targeting specific high-growth verticals, making e-commerce a strategic focus, or concentrating on merchant retention, he says.
“Acquirers should be aware of the spending changes and, specifically, how different industry verticals perform that are represented within their merchant portfolio so they can plan accordingly to navigate spending headwinds,” Istas says.
