Dive Brief:

• As economic headwinds bear down on consumers, bank card volumes in the fourth quarter of 2022 “decelerated sequentially” by about 4%, according to financial firm RBC Capital Markets, which reviewed last week’s quarterly data from major U.S. card issuers JPMorgan Chase, Bank of America, Citi and Wells Fargo. Card volume refers to the bank credit and debit cardholders’ spending amounts during the quarter.
• The sequential slowdown was slightly larger than the RBC analysts expected, they said in a Jan. 13 note to their investor clients.
• “While not an exact correlation, we view this data as indicative of trends for the U.S. payment volumes at Mastercard and Visa,” analysts wrote.

Dive Insight:

The data suggest consumers are feeling pinched by inflation and have begun to rein in spending. 

Across credit and debit, Bank of America’s volume grew 5.2% in the fourth quarter of 2022 – a notable drop from 22% during the same period in 2021, according to RBC.

JPMorgan Chase experienced 9.3% growth, compared to 25.7% one year earlier, while Wells Fargo saw 3% growth, down from 18.4% in Q4 2021. In credit, Citi experienced 8.8% growth in the fourth quarter, compared to 23.6% during the same period in 2021. 

In light of that, RBC estimates Visa’s fiscal year first quarter 2023 volume growth, based on both credit and debit, to be 11.4%, and Mastercard’s Q4 total to be 9.8%. Visa debit volume growth is expected to clock in at 9%, while credit is projected to see 14% growth. Mastercard is estimated to experience 4.9% growth in debit, and 13.8% growth in credit. Visa and Mastercard will report their quarterly earnings on Jan. 26. 

The emergence of other payment methods – such as buy now, pay later and peer-to-peer payment options – has also taken a bite out of bank card volumes.

About 80% of merchants now offer P2P payment methods, and 55% of consumers have used that payment method to purchase goods or services, a recent American Express survey revealed.

Almost half of consumers used BNPL when making an online purchase last year, and 31% of merchants now offer the payment method, the Amex poll showed. About 1,011 consumers and 418 business leaders were polled for the survey in September 2022.