Card-present spending dropped significantly amid stay-at-home orders around the country this spring. New data from CO-OP Financial Services revealed a 41 percent year-over-year decline in card-present spending for credit cardholders during April. At the same time, card-not-present transactions were up 30 percent.
“Stay-at-home guidelines have caused a surge in digital payments,” said CO-OP in a statement.
CO-OP said its own credit and debit portfolio data shows online bookstores purchases, namely Amazon, continue to see a significant increase across credit and debit purchases in April.
“This indicates a strong opportunity for credit unions to begin promoting their card to the top of the Amazon wallet in order to not only capitalize on this spending trend, but also hold on to transactions at this popular merchant for the future,” CO-OP stated.
In-person transactions at grocery stories were down as more members shifted over to online grocery shopping in April, said CO-OP officials. However, the dollar amount of online grocery purchases did increase, indicating a shift in consumer behavior towards more bulk shopping for food essentials,
Contactless and Mobile Wallet Adoption Trending Up
CO-OP also predicts concerns around the physical safety of POS transactions will drive continued rapid adoption of digital and contactless payments.
“Already, 27 percent of small businesses have reported an increase in mobile wallet transactions over the last few weeks. A Mastercard global study found that 46 percent of consumers have swapped out their top-of-wallet card for a card that provides contactless functionality and 74 percent of consumers will continue using contactless payments post-pandemic,” CO-OP said.
Payments Fraud and Delinquency Also a Concern
CO-OP said credit unions should remain vigilant about an uptick in card-not-present fraud amid the increase in online shopping.
“At the same time, be prepared to see an increase in declined payments. Within the CO-OP debit portfolio for instance, online debit transactions denials jumped nearly 91 percent in March alone,” CO-OP said. “Encourage your members to actively monitor and control their payments activity using card controls and by signing up to receive fraud text alerts.”