Despite sluggish economic growth and worrisome unemployment rates, certain indicators as payment card issuers releasing third-quarter results suggest credit and debit card purchase volumes remained relatively healthy through September, according to two new reports from New York-based equity firm Keefe, Bruyette & Woods.
Citing card-spending data through September from card-processor First Data Corp. and issuers’ own monthly charge-off data, the equity firm said U.S. card-spending volume appears to have increased each month of the third quarter, with credit cards demonstrating relatively strong gains in both purchase volume and total transactions.
“Credit volume growth in September continued to grow at a robust clip, which is not only good news for the ‘spend-centric’ business models (those whose customers tend to pay off balances in full each month), but could also potentially bode well for balances of the more ‘lend-centric’ business models (those whose customers tend to revolve balances),” Keefe, Bruyette & Woods wrote in an Oct. 11 note to investors.
Credit card purchase volume growth slowed slightly during September compared with August’s growth rate, while “debit volumes were also solid, with both PIN debit and signature volumes showing more of a pronounced pickup in September,” the equity firm’s analysts wrote.
Credit card charge-off rates “appear poised to continue to decline in September given the positive trajectory of delinquency trends seen over the past couple of months,” Keefe, Bruyette & Woods said in a separate report released the same day.
U.S. credit card purchase volume during September rose 11.9% compared with volume from a year ago, while PIN-debit purchase volume rose 9.2% and signature debit volume rose 5.8%, Atlanta-based First Data said in an Oct. 11 press release accompanying its monthly SpendTrend analysis, which tracks same-store consumer spending through various payment channels at its U.S. merchant locations.
Credit cards generated the strongest growth rate in total transactions during September, rising 11% compared with a year ago. Total signature-debit transactions rose 6% during September, while PIN-debit transactions rose 5.8%, First Data said.
Average transaction ticket-values rose 2.2% during September compared with a year ago, driven by higher prices, according to First Data.
“Rising inflation, particularly on nondiscretionary purchases such as food and gas continued to boost dollar volume growth and average ticket growth, Silvio Tavares, First Data senior vice president and division manager, said in the release.
