PSCU Payments Index October 2023: Discretionary Spending

10/17/2023

Consumer payment behavior remained positive for both credit and debit in the October 2023 edition of the PSCU Payments Index despite a drop in consumer sentiment for September, while the 12-month rate of inflation remained unchanged. This month’s Deep Dive investigates discretionary spending trends in September results.

Key takeaways include:

Consumer purchases maintained their consistent and positive trends in September, although were down from the prior-month growth. Year-over-year growth in debit purchases was up 5.6%, while credit purchases were up 1.4%. Transaction growth finished with debit up 4.6% and credit up 2.6% for the month.
For credit and debit purchases in September, the largest contributor to growth was again the Services sector. Goods and Utilities were the only categories offsetting credit purchase growth, contributing to a 0.6% and 0.1% reduction, respectively. For debit purchases, all sectors contributed positively to year-over-year growth.
The CPI-U increased by 0.4% in September, while the 12-month rate of inflation remained unchanged at 3.7%. Shelter accounted for more than half of the monthly increase in September. Excluding the volatile Energy and Food sectors, the core CPI index increased 0.3% again in September.
Growth in discretionary spending remained strong in September, with debit purchases up 6.2% and credit purchases up 1.8%. Two-thirds of the growth in debit discretionary purchases came from the Entertainment sector – Online Gambling and Events (concerts). For credit discretionary purchases, Events (concerts) and Cruises were top contributors.
The average credit card balance for active accounts exceeded $3,000 for the first time since February 2020, finishing August at $3,003, up 8.0% (or $223) year over year. Growth in BNPL-related payments were strong when looking at the top providers, including Affirm, Afterpay, Klarna, PayPal (Pay In 4) and Sezzle. For September 2023, BNPL debit payments were up 28.0%.

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