By: Cody Banks, MVP, Payments and Fraud Strategy, PSCU
The May edition of the PSCU Payments Index finds continued, strong consumer purchasing activity despite ongoing inflationary pressures.
The Bureau of Labor Statistics (BLS) reported the April 2022 unemployment rate was unchanged from March at 3.6%, with job growth led by gains in Leisure and Hospitality, Manufacturing, and Transportation and Warehousing. This strong job growth and low unemployment will likely fuel consumer spending—even as wage increases due to low labor supply continue to fuel inflation.
Worldwide energy prices remain elevated as the war in Ukraine enters its third month. A proposed ban of Russian oil by the European Union and China resuming production activities from its current COVID shutdown could impact gasoline prices throughout 2023.
As growth in touchless payments at the point of sale continues to gain momentum, this month we explore the growth of Mobile Wallets in our Deep Dive, including the top merchant sectors and usage differences by generation.
Key takeaways from our May report include:
- The Consumer Price Index (CPI-U) for March moderated slightly to 8.3% in April, which was a 0.2% decrease from March – and the first drop in the CPI in eight months. In April, the Fed increased interest rates by 50 basis points with another half point hike on the table for its meetings in June. It is the first time in 22 years that interest rates have been increased by a half point to help counterbalance the highest inflation in 40 years.
- Mobile Wallets continue to show strong growth, with notable growth coming from younger generations. For Gen Z (19- to 23-year-olds), Mobile Wallet transactions in April were up 158% for credit and 102% for debit year-over-year. The importance in being top of wallet in their mobile device for this age group is growing, as Mobile Wallet transactions now represent 7.4% of Card Present debit activity and 3.9% of Card Present credit activity. Apple Pay, Google Pay and Samsung Pay are the top three mobile wallets, with Apple Pay having 89% share of debit card Mobile Wallet market share and 83% of credit card Mobile Wallet market share. Google Pay had 6% of debit and 11% of credit market share, and Samsung Pay had 4% of debit and 5% of credit market share. Restaurants represented the largest percentage of Mobile Wallet transactions overall for both credit and debit in April, followed by Groceries, Goods, Gasoline and then Drug Stores. The breakdown differs when looked at in terms of generations. Restaurants remained the top sector for percentage of Mobile Wallet use for all generations, except for Baby Boomers +. The oldest generation’s top sector for credit Mobile Wallet transactions was Grocery stores and it was a tie between Restaurants and Grocery stores for debit transactions. Within the Restaurant category, usage skewed toward Fast Food Restaurants for the younger generations and Full-Service Restaurants for the older generations.
- Consumer spending on cards remains strong, with credit purchases up 20% and debit purchases up 4% year-over-year. Again, contributing to the lower growth in debit was exceptional spend in 2021 funded by the third economic stimulus payment. The Entertainment sector once again posted top growth rates for credit and debit purchases in April. For credit purchases, Travel and Gasoline were a close second and third, respectively. For debit purchases, Gasoline was a close second, with Restaurants and Travel tied for a more distant third.
- The average credit card balance for April 2022 was $2,711, up 3.4% (or $90) year-over-year. April marked the second consecutive month of year-over-year growth.
The Payments Index continues to evolve along with consumer preferences and behaviors, and we continue to emphasize our monthly Deep Dive while focusing on year-over-year changes (with fewer comparisons to pre-pandemic 2019). Our Deep Dive topics also take a closer look at the payments preferences of different generations, where applicable. We hope our credit unions can take these relevant insights to help make informed, strategic decisions throughout 2022.
Cody Banks leads PSCU’s payments, fraud, loyalty & contact center product teams. In his role, Cody focuses on developing and delivering safe, easy and convenient payments experiences for the company’s Owner credit unions. Prior to joining PSCU in 2017, Banks spent nearly 10 years in the credit union industry navigating complex initiatives with a focus on journey mapping of the member experience.