Card spending expected to grow in the post-pandemic, study finds

By Gaia Lamperti

After almost two years of lockdowns and economic downturn and the rise of new credit options like BNPL, the credit card sector was hit hard in recent times, resulting in a decline in the amount spent on credit card purchases last year.

Despite this, new research based on data collected by research firm RBR for its latest study Global Payment Cards Data and Forecasts to 2026, showed that overall card expenditure continued to grow.

During Covid, most consumers shifted their purchases from cash to debit cards, and particularly to contactless payments, whose spending increased by 6% contrary to credit card spending shrinking by 8%. Such decline was largely a result of a lack of cross-border and travel and entertainment purchases, which are more common among credit cards.

Overall card spending picked up also thanks to the boom in e-commerce, the direct consequence of last year’s global lockdowns, which offered consumers more options for online shopping, streaming services, and digital subscriptions. According to the RBR study, in 2020, e-commerce accounted for 22% of total global expenditure, compared to 16% in 2019.

It looks like some of the new spending behaviour witnessed in Covid times will remain for the long term: “Cardholders across the world changed their habits as a result of the pandemic, embracing contactless and e-commerce; now that this genie is out of the bottle, it is unlikely to go back in,” commented Daniel Dawson, who led the research for RBR.

Purchase Volume Worldwide, 2019-2026 (US$ trillion)

Now, as economies around the world begin to recover and retail outlets reopen, growth in credit card expenditure will continue in 2021, at least by 17%,  and is expected to return to similar levels to those seen before the pandemic from 2022 onwards, the report forecasts.

Just a few months ago some of the biggest US banks, including Capital One, Citigroup and JPMorgan, announced they are prepared for credit card balances to bounce back again this year as the pandemic restrictions ease, setting up the industry for a bump in one of its most profitable businesses.

These banks have been sending out more promotions to enrol new customers and encourage borrowers to spend. “The big banks are ramping up in anticipation of the recovery post-pandemic,” said Andrew Davidson, spokesperson for marketing-tracker company Mintel Comperemedia. “They are really trying to make up lost ground from last year.”