Despite brick-and-mortar merchants and restaurants still experiencing a year-over-year decrease in credit and signature-debit card sales, the decline is becoming more moderate, and is even increasing at high-end restaurants, as the economy continues to slowly recover, new research suggests.
New York-based financial products and services provider Capital Access Network Inc.’s data-services division conducted the research based on information the company gathered directly from batches of merchant and restaurant credit card sales.
Capital Access Network's subsidiary AdvanceMe Inc. buys future credit card receivables through its Merchant Cash Advance product from small businesses needing working capital. It used the information for its research, which involved more than 10 million data records collected from more than 50,000 U.S small and midsize businesses, some of which are customers.
During the second quarter ended June 30, same-store credit and signature-debit card sales dropped 5.6%, up from a 14.8% reduction during the same period last year and an improvement from a 9.16% year-over-year reduction in the first quarter, Capital Access Network found.
The decline in card sales seems to be moderating, Mark Lorimer, Capital Access Network chief marketing officer, tells PaymentsSource. The numbers still are below the “zero line” but are steadily increasing each quarter, he says.
Moreover, high-end and established restaurants experienced positive card-spend growth during the second quarter, with restaurants in operation for between 10 and 15 years experiencing a 4.18% increase in spending compared with approximately a 15% reduction a year earlier. Restaurants in business more than 15 years experienced a 1.05% increase in card sales from about a 9.9% year-over-year decrease last year.
Capital Access Network attributes the most-recent increase to “some bright spots in the economy. Also, card sales declined so far in [this sector], the numbers are starting from a lower base,” Lorimer adds.
Additionally, restaurants with purchases averaging more than $100 rebounded reported a 2.75% increase in card sales since last year, marking the first year-over-year card growth for this type of merchant since the third quarter of 2008, Lorimar says. Since the fourth quarter of 2008, card sales in the category declined annually by about 17.76%.
The report also suggests a trend toward debit and prepaid card use among U.S. consumers, especially PIN-debit cards. Capital Access Network attributes the increase to banks restricting the availability of credit lines, causing some consumers to rethink how they pay for purchases, Lorimer says.
Capital Access Network predicts to see an increase in credit card sales next year based on trends observed over the past few quarters, Lorimer surmises.
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