Late-summer spending edges closer to normal: CO-OP
New data from CO-OP Financial Services shows consumer spending patterns beginning to return to normal as summer comes to a close, with debit transactions down just 3% year-over-year.
The company reported a 10% lift in debit transaction amounts, pushing a 12% net increase in interchange for credit unions. Credit card spending saw similar gains, with transactions up 4% year-over-year, while transaction amounts grew by 11% and interchange increased 7%.
While year-over-year transaction volumes at online retailers such as Amazon, hardware stores and discount retailers continue to be up, one spending category saw outsized growth in August.
Transaction volumes for political organizations saw massive growth in a the month as both Republicans and Democrats held their presidential nominating conventions. Credit transactions for political groups were up by 199% (with dollar amounts up 350% year-over-year) while debit transactions rose 174% (a 302% spending increase). CO-OP did not specify if those spending levels were related to the conventions or if they might continue through the election.
But CO-OP warned that the change in seasons could bring a shift as unemployed Americans are no longer receiving an extra $600 per week and most consumers have already spent their $1,200 pandemic relief checks from the government.
“With the immediate prospects of a new government stimulus package unlikely, credit unions can expect a segment of their members to suffer from reduced or lost wages,” the company said in a news release. “This will lead them to begin shifting away from debit and toward credit, as they are forced to draw on credit lines to cover regular monthly bills and essential expenses.”
CO-OP added that concerns surrounding contagion have helped drive adoption of contactless payments. The company cited a statistic from Mercator that 25% of consumers have now tried some form of touch-free point-of-sale purchasing, whether through a mobile app, contactless card or both.