Mastercard Sees Holiday Spending Climbing

Dive Insight:

The prediction from Mastercard, whose network enables credit and debit card transactions, follows on a year of mainly rising sales. The company’s August snapshot said retail sales rose 8.1% over last year, mirroring an 8.1% increase in e-commerce sales for the month.

Payments industry consulting firm The Strawhecker Group released data recently that echo the trend, showing 21% growth in consumer spending on credit and debit cards nationwide in July compared to the same month last year. Card spending by consumers in July was higher in most of the 250 industries covered by TSG’s year-over-year analysis released Aug. 25.

With the COVID-19 pandemic continuing to keep consumers away from stores to some degree, Mastercard’s prediction of increased online sales will build on a surge that first appeared last year when the deadly virus arrived. The company said it expects e-commerce sales to be 57.3% higher than in the 2019 holiday period.

Still, card rival Visa, the biggest U.S. credit and debit card company, said in its August monthly index report on “spending momentum” last week that consumer demand tapered last month relative to July. The index reading nonetheless continued to show an increase for August over last year.

“Although consumer spending momentum downshifted in August, the recovery remains on track,” said Visa Chief Economist Wayne Best said in the release accompanying the report.

All of the increased spending could contribute to inflationary pressures on the economy that is worrying some economists and financial executives.

Nestle CFO Francois-Xavier Roger said at a recent Barclays Global Consumer Staples Conference that he expects some of the world’s largest food conglomerate’s costs to rise. His colleague, Nestle USA Chairman and CEO Steven Presley said: “Our strategy is to offset anything we receive through pricing,” Roger said at a fireside chat. “The idea is to pass it on to the trade and to consumers whenever we receive it.”