In accordance with its monitoring of the Covid-19 impact, Visa recently provided a November update on domestic spending, cross-border volume, and global processed transactions growth.
Summary:
- Total U.S. payments volume grew +6% y/y in November, a -4 pt deceleration from October, led by a -5 pt monthly slowdown in Debit volumes in part due to a smaller contribution from prepaid spending.
- Quarter-to-date, U.S. debit volume is tracking at +21% y/y, representing a more modest -2.7 pt slowdown from 3Q20 levels.
- Meanwhile, U.S. credit volume is tracking at -4% y/y in 4Q20, continuing the improvement from the preceding levels of -7.4% y/y and -21% y/y in 3Q20 and 2Q20, respectively.
- The company noted variance in international market trends based on the level of pandemic-related restrictions and holiday timing in November.
- The UK, Italy, and Germany saw overall payments volume slow in November due to heightened COVID-related restrictions
- In India and Hong Kong, domestic payment volumes were stronger in November due to Diwali-related and Singles Day sales
- In Australia, the UAE, Japan, and Brazil, domestic payment volume growth was equal to or better than October levels
- Cross-border volumes excluding low margin Intra-Europe transactions continue to remain deeply depressed, down -33% y/y in November and driven by a -70% y/y decline in travel-related cross-border spend.
- Quarter-to-date, cross-border volumes ex. Intra-Europe are tracking at -35% y/y, a +6 pt improvement over the -41% y/y decay reported in 3Q20.
- Global processed transactions were up +3% y/y in November, tracking +4% y/y in 4Q20, which represents a +1 pt improvement from 3Q20 levels.
Key Takeaways:
- Several months removed from the expiration of enhanced UI benefits, domestic spending volumes slowed a bit on the margin, but are holding up relatively well in November, with debit spending volumes proving robust as the recovery in credit spending continues to make progress.
- Cross-border volumes remain severely depressed; however, cross-border e-commerce appears to have helped drive somewhat of a recovery in late November despite travel-related spending remaining deeply in the red. With little prospect for a broad lift in travel restrictions, cross-border travel spend is unlikely to meaningfully rebound until sometime in 2022, especially when taking into account the approximately three years required for international travel to recover following the September 11th attacks.
- With the recent Fall spike in COVID-19 cases, we observe the expected divergence between domestic e-Commerce spend, taken as card-not-present volume ex. travel, and card present volumes in late November.
