PSCU Report Shows Transaction Volumes Still Down, Consumers Snubbing Cash

PSCU’s weekly analysis of transaction trends has landed, and though there’s cause for cautious optimism, the COVID-19 crisis looms large in the data.

The report revealed that overall card payment volumes have continued to drop slightly, while spending in the U.S. rose about 16% for debit and fell 3% for credit. Meanwhile, consumers are using less cash than they were this time last year, instead opting for contactless and card-not-present payments.

Consumers are significantly more likely to make debit transactions with mobile wallets such as Apple Pay, Fitbit Pay and Google Pay than they were in 2019 — 81% more likely, to be exact. Likewise, credit union mobile wallet transactions rose more than 47%.

ATMs also saw about 20% fewer cash withdrawals this year, continuing the trend of recent weeks.

The week ending July 19 was a mixed bag for merchants, as groceries and drug stores remained popular while the travel and entertainment sectors suffered.

Grocery purchases have increased by 11% for debit and 14% for credit compared with last year, and drug stores have enjoyed an almost 10% and 4% bump. But consumers made 30% fewer travel purchases with debit cards and credit payments took a 61% dip. The entertainment industry shared a similar fate, witnessing 36% less debit and 55% less credit card spending.

The most popular categories in the consumer goods sector were electronics, home, sporting goods, automobiles and discount stores, according to PSCU’s report, which said purchase volume remained healthy. Services were also trending up for credit and debit, which predominantly is due to an increase in health care and home services.

The ‘Hot Zones’

Breaking down the data by state, PSCU found debit spend was up almost 15% and credit spend had dropped about 7% in the first eight states to be dubbed “hot zones,” or virus epicenters, during the COVID-19 pandemic. They included New York, Connecticut, New Jersey, Illinois, California, Michigan, Louisiana and Washington, D.C., which are still seeing a contraction in overall spending compared to the rest of the nation, according to the report.

The 10 newest “hot zones,” however, haven’t deviated much from the U.S. performance as a whole, as they saw debit spend rise more than 10% and credit spend has dropped 5%. Those states included Alabama, Arizona, Florida, Georgia, Texas and South Carolina.

As for the eight states that never issued formal “stay-at-home” orders, PSCU found they’ve experienced less growth than the rest of the country for the past four weeks. Those states were Iowa, Arkansas, North Dakota, South Dakota, Nebraska, Oklahoma, Utah and Wyoming.

The report revealed some interesting trends, according to Glynn Frechette, SVP of Advisors Plus at PSCU.

“While overall payment volume was down slightly once again, consumer spending remains positive and relatively unchanged for the week,” Frechette said in a press release. “We continue to see interesting variations by market, with the original eight ‘hot zone’ states underperforming compared to the overall U.S. and the second group of 10 ‘hot zone’ states performing in line with the overall U.S. We also saw continued growth in contactless transactions and mobile wallet purchases.”