While restaurants experienced a slight increase, small and mid-sized brick-and-mortar merchants experienced a 3.09% decline in overall credit and signature-debit card sales during the first quarter ended March 31. This marked the 14th consecutive quarterly decline, new research suggests.
Scarsdale. N.Y.-based Capital Access Network Inc.’s Data Service Division conducted the research from credit and debit card sales trends based on same-store card sales data found in Capital Access Network’s data warehouses.
The warehouses contain 12 years of data and include more than 50,000 businesses and daily card sales data collected from more than 80,000 working capital and loan transactions.
Brick-and-mortar merchants have not seen an increase in card sales since the third quarter of 2007, Capital Access Network said in the report. Card sales, however, did decrease 607 basis points from 9.16% to 3.09% during the same period last year.
Capital Access Network did not provide actual figures.
First quarter 2010 saw such a big decline in card sales because of the economic environment as well as the shift from credit to debit card usage, Ron Shevlin, a senior analyst at Boston-based Aite Group LLC, tells PaymentsSource.
Moreover, because of the economic downturn, there also was a decline in overall sales, he adds.
Brick-and-mortar merchants, however, are experiencing the decrease in credit and signature debit usage at a much slower rate than big-box and national retailers, Mark Lorimer, Capital Access Network’s chief marketing officer, tells PaymentsSource.
Research also showed consumers in more rural areas (population less than 100,000) are slowing their credit and signature-debit purchases at a higher rate than their suburban counterparts, according to Capital Access Network.
Card sales during the first quarter in more rural areas, fell 3.98% compared to a 2.10% and 2.70% decline in more populated areas.
“It is not a surprise that credit and signature debit card sales have declined because during the recession many consumers credit card accounts were closed,” Aite’s Shevlin says. Additionally, many consumers have shifted from signature debit to PIN-debit, he adds.
The economic downturn also has shifted card transactions to cash, Shevlin notes. Consumers now have more discipline when spending and are not willing to use cards as much, he adds.
While brick-and-mortar merchants are seeing a decrease in card use, every restaurant category including fine and casual dining saw an increase in card spend during the first quarter.
Fine dining restaurants reported card sales growth of 0.06% while more casual dining establishments saw a 0.46% increase. Restaurants with an average ticket price between $50 and $100 experienced a 1.54% increase.
“This is the first time all restaurant categories have seen an card usage increase since the second quarter of 2007,” Lorimer says. “Overall, our data for the last several quarters has shown that restaurants are recovering faster from the economic downturn than brick-and-mortar merchants.”
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