The Primax Payments Pulse: Spring 2023 Spending Report revealed signs of slowing economic growth, including softened consumer purchasing and lower average purchases for both credit and debit. The report takes a deep dive into the ongoing increase in Digital Payments versus traditional Physical Card payments, as well as a definition of “Digital Payments.”
Key Takeaways
Some key takeaways from the report include:
- Both credit transactions and purchases saw a 6% year-over-year increase in the first quarter of 2023, while debit transactions were up 5% and debit purchases were up by 6%, all compared to the first quarter of 2022.
- In March 2023, transactions grew at a higher rate than purchases for both credit and debit cards compared to the previous year, indicating a continued moderation in consumer spending. This was last observed in April 2020, when credit card transaction growth and purchase growth were both negative.
- Discretionary spending on credit cards slowed down in the first quarter. From January to March, discretionary purchases for credit cards were 13%. Monthly year-over-year growth rates for this category were 22%, 13% and 6% in January, February and March, respectively. Discretionary debit purchases grew by 11% for the quarter, with monthly results showing increases of 16%, 9% and 8%.
- Digital Payments, encompassing Card Not Present, Mobile Wallets and tokenized activity, were significant, accounting for 44% of all credit transactions and 56% of all credit purchases in the quarter. For debit, Digital Payments represented 36% of all transactions and 49% of all purchases.
Looking Ahead
In March, the Consumer Confidence Index saw a modest rise to 104.2 (1985=100), primarily driven by an improved outlook from participants under the age of 55 and households with incomes exceeding $55,000. In the previous month, the Consumer Confidence Survey included a specific question about spending intentions for the next six months. The results revealed that consumers anticipate spending less on discretionary categories such as travel and entertainment, despite a slight improvement in overall economic confidence. Consumers continue to exercise caution amid the uncertain economic conditions.
We hope the Primax Payments Pulse continues to bring about greater clarity on trends in payment preferences and consumer sentiment, especially with the uncertain state of the economy. As we recently expanded our reporting to include payment trends in discretionary and non-discretionary buckets, we hope this refinement continues to help our financial institutions make informed, strategic decisions.
Kimberly Ploof has more than 30 years of leadership in the payments industry. As Managing Vice President, Kim leads teams that foster in-depth, strategic and productive relationships with Primax clients. Prior to working with Primax, Kim was the Chief Operating Officer of Covera in Albany, NY. At Covera, Kim was instrumental in building the business model and rebranding the organization to be a widely known payment processing solutions provider. Within the payments industry, Kim has served on various committees to drive financial institutions’ overall growth and strategic objectives.
