Enabling Technologies

First Data Analysis shows Significant Growth Rates in Prepaid Card Usage

First Data recently did an analysis of point-of-sale data tracking the usage pattern of credit cards, signature debits, prepaid cards and others. The analysis also covered spending patter across multiple segments and various market areas. The analysis was done as part of First Data SpendTrend report. A major highlight in the analysis result was prepaid cards showing a higher growth rate than even credit cards during the period of study. It shows how prepaid cards are moving ahead in developing nations and in developed nations as well like U.S.

The combination of consumers soaking up the last weeks of summer before and during Labor Day weekend and August back-to-school shopping helped power the strongest retail spending growth in 13 months, according to data reported today by First Data Corporation, the global leader in payment technology and services solutions. The First Data SpendTrend report examined the period for Aug. 2 through Sept. 2, 2014 compared to Aug. 1 through Sept. 1, 2013. SpendTrend tracks same-store point-of-sale data by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks from nearly 4 million merchants locations serviced by First Data in the U.S.

Overall retail spending growth was the strongest in over a year with retail dollar volume growth at 2.8% in August (vs. 2.6% in July), as back-to-school shopping propelled spending growth in several retail categories. Dollar volume growth at Furniture and Home Furnishings and General Merchandise Stores was positive on a year-over-year basis and increased sequentially compared to July with a growth of 4.5% and 4.4%, respectively.

Driven by August vacations, leisure spending growth rebounded in August, and at 3.3% was the strongest in six months. As summer waned, vacationers contributed to the rise in year-over-year spending growth in the Hotel and Travel categories, at 9.3% and 5.1% growth, respectively, a marked improvement when compared to last month’s spending growth of 7.9% and 4.6%.

“Two important factors – back-to-school spending and late summer vacationing – contributed to strong overall consumer spending in August and despite stagnant wage growth and a moderate housing market, consumer confidence rose in August,” said Krish Mantripragada, SVP, Information and Analytics Solutions with First Data, adding, “robust credit card spending at 5.8%, was healthy again last month, surpassing both PIN and signature debit growth.”

August’s overall average ticket growth remained positive at 1.2%, slipping slightly from July’s 1.5% on a year-over-year basis. Gasoline station average ticket growth fell to -2.3% compared to July’s decline of -0.2% as gasoline prices fell on both year-over-year and month-to-month bases. Meanwhile, the average ticket growth of 0.8% was an improvement over 0.4% last month as retailers were less aggressive with price discounting.

August Dollar Volume Growth CHANGE
Credit +5.8%
Signature Debit +1.9%
PIN Debit +3.4%
Check -5.9%
Prepaid +6.0%

Note: All transactions are same-store growth.

Processing more than 59 billion transactions globally in 2013, First Data has long been a data powerhouse with the ability to help its clients use transaction data to prevent fraud, identify spending patterns and create loyalty programs.

Here is an illustration featuring key highlights of the study conducted:

spendtrend-data-201408

Source: First Data

This article was adopted from an official press release by First Data.

Ray

Ray has keen interest in the area of devices, OS and wireless technologies. He is a Mobile Technology enthusiast and believes that Mobility is going to completely change the way we do Payments and Commerce. He wishes to share this belief with the world by providing such content through LetsTalkPayments. Ray has done his engineering as well as MBA.

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