By: Kim Ploof, Managing Vice President
The Primax Payments Pulse: Summer 2023 Spending Report revealed signs of increased consumer sentiment about the economy, with consumer spending still moderate. Debit had higher year-over-year growth than credit, but purchase growth lagged behind transaction growth for both, affecting average spending. This report takes a deep dive into the Services sector and identifies the leading merchant categories that contributed to sector growth.
Key Takeaways
Some key takeaways from the report include:
- During the second quarter of 2023, credit and debit transaction growth surpassed growth in purchases. Debit activity outperformed credit, with debit transactions increasing by 3.9% and credit transactions growing by 2.8%. Debit purchases saw a year-over-year increase of 3.4%, while credit purchases rose by 1.2%.
- The Services sector played a significant role in the growth of credit purchases, contributing 1.3 percentage points to the overall increase. However, this growth was partially offset by a reduction of 1.5 percentage points in Gasoline and Goods. For debit purchases, Money Services had the highest growth in June, adding 1.5 percentage points to the overall increase, but was offset by a reduction of 1.3 percentage points in Gasoline.
- In June, the Consumer Price Index (CPI-U) saw an annual decrease from 4.0% to 3.0%, marking the lowest inflation rate since March 2021. The majority of the all-items inflationary increase was attributed to the Shelter category, accounting for over 70% of the increase. The Fed increased rates by 0.25% on July 26 and has signaled the likelihood of another rate increase later in the year.
- The Services sector’s Deep Dive analysis revealed that Insurance and Medical/Health Care were the notable standout categories. For the overall Services sector, both credit and debit purchases experienced growth in June, with increases of 6.0% and 5.5%, respectively. These top merchant categories significantly contributed to the sector’s overall growth.
Looking Ahead
Recession fears have decreased for now, but they will continue to be a concern over the next twelve months. Despite low unemployment and a slight cooling in job creation, inflation remains above the Federal Reserve’s 2% target rate, and there is a possibility that an additional rate increase might take place earlier than anticipated.
Our goal for the Primax Payments Pulse is to offer insights into consumer sentiment trends and payment preferences, enabling our financial institutions to make well-informed and strategic choices that serve their customers effectively. We hope this report continues to bring about greater clarity on trends in payment preferences and consumer sentiment as the economy continues to shift and evolve.
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.
