That may be the most germane quote — the “takeaway” if you will — from an interview that Nitin Sumangali did regarding MasterCard Global Insights’ recent white paper on consumer spending habits and whether they’re still in a “recession mindset.”
The study used publicly available data since the recession hit its presumed bottom in 2008, and has showed that since then — even though consumers do have altered ways of spending and shopping now — overall prepaid card volume grew by $129 billion, on the U.S. credit card side, that volume was up by $172 billion by last year
Sumangali himself is one of the analysts for Global Insights, and in talking to industry journal Pymnts.com, said the data indicates “consumers feel a lot better about their finances” now. He also noted that in the four year period “we did see that there was a net shift away from credit cards to debit cards,” though allowed that there was a slight pendulum shift back to credit, from debit use, among credit card users.
But the more interesting trend was the move from cash into debit cards, where, apparently, it’s staying. According to Sumangali: “One of the things that we’re seeing from the shift away from cash and toward debit and other forms of electronic payments. In the wake of the crisis, consumers began to view themselves as a small business, asking ‘How do they manage their inflows,’ ‘How do they outflows?’
“We see that the benefits of electronic payments in terms of displacing cash really stems from this idea that it’s a better idea for consumers to manage their spending in a holistic way across all products, and that includes borrowing and spending and improving their financial health.”
“According to our research,” Sumangali added, “about $90 billion in spending moved from cash to debit from 2008 to 2012.”
So not only are customers feeling better than they were about using plastic — your former cash customers, even though still wanting to pay “cash,” in a sense — are using plastic, too.
Which means you have to be ready by being able to not only accept all kinds of plastic — whether online, in-store, or “ going mobile” out in the field, at a trade show, etc.
That’s not just a global insight — it’s as local as your business, and your customer base! Contact your AVPS rep today. And who knows? You may want to start offering your own prepaid and gift cards, as well!