December again proved to be a busy month with spending topping $6 billion though the Paymark network but the growth rate was low.

There were 120.7 million transactions, 2.0% more than in December last year, but this amounted to a 1.2% increase in the value of goods and services traded though the network, below the 5.0% p.a. underlying growth rate of the previous 11 months.

In Auckland/Northland, the value of transactions did not grow at all December to December. The fastest annual growth in spending occurred away from the major centres in Whanganui (6.6%), Palmerston North (5.8%) and Southland (5.7%).

Darren Hopper, Head of e-Commerce, Digital Experience & Marketing at Paymark says the figures show an interesting trend in the payments’ landscape.

“Paymark transactions reached new highs before Christmas and over the month in general but figures also point to several pressures on merchants. The annual growth rate was generally low and below the rate of the recent months that would have shaped retailer expectations. We also saw widespread discounting which appears to have accelerated the trend towards lower average transaction value. There continues to be growing use of scheme credit and debit cards which adds to the bank fees paid by merchants. And, to further pressure the bricks and mortar merchants, e-commerce growth has accelerated of late.“ 

The majority of Paymark transactions are still with traditional bank-issued debit cards, totalling 70.7 million in December, but these were 2.1% fewer than a year ago. The transaction growth experienced was dominated by the higher fee-incurring credit and debit cards issued by the credit card companies, with these transactions numbering 50.0 million, up 8.5%.

Across all cards, the average transaction value was $49.77, down 0.8% on 12 months earlier. The average value has been falling for several years as cards are increasingly used for lower-valued transactions but the recent decline also reflects downward price pressure within some sectors.

Fuel prices are known to have declined but this drop had a negligible effect on the change in the average transaction value across all sectors. More significant was the lower price of electronic and electrical goods, showing as a 15.2% lower average transaction value amongst electrical and electronic goods retailers.

“Anecdotally there were also many sales, starting back on Black Friday (November 23), and this may have pushed the average transaction value lower as well, although this is difficult to see in Paymark figures as only the total transaction value is recorded. There may have been more, or fewer, items than usual within each transaction as well.“ 

As usual, spending patterns did vary amongst merchant groupings. Toy retailers recorded 11.3% higher spending through Paymark December to December. Also relatively strong were hardware and home decorating stores (6.1%) and chemists (5.5%). Spending growth on food and liquor was high relative to other merchants, including amongst supermarkets and liquor stores (3.9%) and restaurants, bars and cafes (6.3%), although both sectors experienced growth rates below those of recent months.

Spending declines occurred for accommodation merchants (-2.5%), as well as amongst the above-mentioned electrical and electronic group of merchants (-19.9%) and by clothing and footwear merchants (-4.7%).

Spending through Paymark e-commerce channels still makes up a relatively small portion of Paymark transactions at only 6% of total transactions in December ($370 million), but the annual growth rate of 16.1% is rapid. In contrast, spending across the rest of the network grew at a mere 0.4%.

“It is noticeable this year that spending growth was slow in early December. At the time, this was put down to a busy Black Friday weekend and expected heavy spending immediately before and after Christmas Day. As it turned out, the days before and after Christmas Day were busy but the extra spending did not make up for the early December low growth. The net effect is that the annual growth rate is low whether December is considered in isolation or combined with November.”

Spending through Paymark across November and December totaled $11.4 billion, up only 2.7% on November-December 2017. The respective ecommerce and bricks/mortar two-month annual growth rates were 17.8% and 1.8%.

The busiest day of 2018 recorded by Paymark before Christmas was Thursday 20th December with $296 million worth of transactions processed, although this remains below the peak day of 2017. The busiest period was at 12.16pm Saturday 22nd December when a record 182 transactions per second were switched through the network.