It’s not unusual for debit-card spending growth to outpace credit-card growth during economic downturns as people get more conservative with their money, but the pandemic has added new twists to that dynamic.
But another pandemic-era trend could persist. The COVID-19 crisis has sped up a shift away from cash amid concerns about the cleanliness of paper money, and in an increasingly remote world, people moved more everyday spending online, and to debit cards, with surging growth for services like grocery delivery.
Mastercard Inc. was somewhat more measured in its commentary, with Chief Financial Officer Sachin Mehra telling MarketWatch that he expects “some level of reversion to the mean” given the “sheer impact of what you’ve seen come through in the nature of stimulus payments.” When the stimulus impact wears off, he anticipates “a compression in growth rates between debit and credit.”
“Recall the Durbin Amendment requires two unaffiliated networks to be enabled on debit cards—with one signature debit network and one unaffiliated PIN debit network satisfying the requirement,” wrote Barclays analyst Ramsey El-Assal. He noted that “information gathered by the Fed indicates certain bankcard issuers continue to enable only one dual-message network for card-not-present transactions.”
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