17 Aug Mastercard CFO says US consumers “ready and willing” to spend more than before
Mastercard CFO Sachin Mehra told CNBC that consumer spending in the United States is expected to surpass pre-pandemic lockdown levels based on Mastercards second-quarter earnings report.
Additionally its gross dollar volume (purchase activity depiction) was up 33% year-over-year to $619 billion. According to Mehra, these spending trends suggest increased consumer confidence as our economy recovers from the height of the pandemic.
“People are looking to spend and they are exercising that intent right now.” He told CNBC “Does the stimulus play a part in that? Absolutely. Does the high level of savings across the board play a part in that? Totally.”
Mehra suggests that the post-lockdown inflation plays a role in addition to the high level of savings consumers have at this moment. The new “aversion to cash” due to the pandemic is also resulting in greater card and digital payment transactions.
“Contactless has been on an upwards trajectory even pre-pandemic. People have seen the convenience that it presents, and it has only accelerated. The U.S. has always been a laggard when it comes to contactless, but that’s changing. The aversion to cash is one component. It’s just a good user experience.”
Over the past 12 to 18 months, consumer spending was primarily non-discretionary, meaning groceries, utilities, essential purchases…etc. Mastercard now is beginning to see a shift towards discretionary categories such as dining, hotels and travel.
The increase in discretionary spending comes with higher credit growth rates and healthy growth in debit.
Overall the outlook on the industry appears positive as we move towards pre-pandemic lockdown spending.
For more information check out Mastercards Q2 financials here and CNBCs post with Mastercard’s CFO, Sachin Mehra here.