In accordance with its monitoring of the Covid-19 impact, Visa recently provided an August update on domestic spending, cross-border volume, and global processed transactions growth.
Summary:
- Total U.S. payments volume rose +7% y/y in August, a -1 pt decline from July, led by a -2 pt slowdown in Debit spending in part due to the July expiration of enhanced unemployment benefits.
- The company noted that the majority of its international markets have followed a similar trajectory as the United States in August.
- Japan, Germany, and Canada saw positive domestic spending growth, relatively consistent with July
- Brazil, UAE, Italy, and the UK saw positive and sequentially improving domestic payment volume growth
- Countries such as India and South Africa continue to exhibit negative domestic spending growth
- Cross-border volumes excluding low margin Intra-Europe transactions continue to remain deeply depressed, down -43% y/y in August and driven by a -70% y.y decline in travel related cross-border spend.
- Global processed transactions were up +3% y/y in August, accelerating +2 pts from July and rising to +5% y/y as of the last week in April. This result is consistent with the pickup in domestic transaction volumes resulting from the gradual normalization of consumer activity
Key Takeaways:
- One month removed from the expiration of enhanced UI benefits, domestic spending volumes held up well in August; however, given the level of support from elevated debit spending volumes and concern over the waning support of stimulus, the next few months will provide better color on the sustainability of domestic spend trends
- Cross-border volumes remain in the gutter and, with little prospect for a broad lift in travel restrictions, are unlikely to meaningfully rebound until sometime in 2022 or 2023, especially when taking into account the approximately three years required for international travel to recover following the September 11th attacks
- While domestic e-Commerce spend, taken as card-not-present volume ex. travel, remains solid at +30% y/y as of the last week in August, the -10 pt slowdown since mid-July suggests online volumes in response to the gradual reopening of the economy
