Dive Brief:

• The card network giant disclosed transaction statistics last week showing its growth this year has tapered, with its growth in U.S. payments volume, by dollar value, narrowing to 9% for the first three weeks of November, according to a filing with the Securities and Exchange Commission on Nov. 23, 2022. That was down from a 10% growth rate in October, per the recent filing, and a 21% rate at a monthly peak in February, according to a prior filing.
• For credit transactions, the growth rate contracted to 10% in the three-week November period, from 12% in October, while the rate for debit transactions in November contracted to 8%, from 9% in October, the most recent SEC filing showed.
• Nonetheless, compared to October and November of 2019, before the COVID-19 pandemic led to large-scale lockdowns worldwide in the wake of deaths, Visa’s payments volume has more than doubled for those months. Visa’s latest filing disclosed payments volume and transaction data through November 21.

Dive Insight:

The slower growth at San Francisco, Calif.-based Visa comes as the U.S. braces for a possible recession, with consumers tightening their budgets in the face of inflation and companies cutting back on jobs and expenditures. 

Still, higher prices work in favor of Visa when it comes to the dollar value of payments that flow through the company’s card networks. The company defied recession talk last month when it reported fiscal fourth-quarter net income jumped 10% to $3.9 billion over last year as revenue soared 19% to $7.8 billion.

Visa’s ongoing growth demonstrates the persistent appeal of the largest U.S. card network’s debit and credit cards even as consumers begin taking a more cautious approach to purchases and spending. It follows a 7.7% rise in the Consumer Price Index this year and the Federal Reserve hiking interest rates at the fastest pace in years.

Still, the tapering of Visa’s growth may also reflect competition from payment alternatives, including buy now-pay later installment options. A proliferation of those BNPL choices, offered by Affirm, Afterpay and Klarna, among others, may be seen by consumers as a way to stretch their dollars and avoid rising interest rates.

Visa’s reduced growth may also indicate declining consumer confidence due to the macroeconomic headwinds. The card network company’s reported transaction growth, based on transactions processed, provides another view of sagging demand, with growth dropping to 10% in November, from a monthly peak earlier this year of 22%.

Nonetheless, a report from Visa rival Mastercard showed a strong start to the year-end U.S. holiday shopping season on the day after Thanksgiving, known as Black Friday. U.S. retail sales climbed 12% on Friday, on a year-over-year basis excluding automotive, as in-store sales rose 12% and e-commerce sales jumped 14%, Mastercard said in a Nov. 26 press release.That’s despite at least one retailer, Target, reducing its expectations earlier this month.

Credit card use declined in the months following the onset of COVID-19 while debit card use increased as Americans’ bank accounts filled with federal government stimulus payments. When those government payouts waned this year, the use of credit recovered and its growth rate overtook debit card growth. But in February this year Visa’s credit growth rates began trending down again and the following month, in March, debit growth began climbing again, with the rates converging in more recent months.