OREANDA-NEWS. December 22, 2015.

Key Developments

  • Today the Central Bank of Ireland releases an enhanced data set on Credit and Debit Card Statistics, with new expenditure category breakdowns.
  • In October 2015, total transactions on debit cards amounted to approximately €3.7 billion. Some €2.1 billion of this spending was attributable to Point of Sale (PoS) activity, while the remaining €1.6 billion was accounted for by ATM transactions (Chart 1).  In the same month, PoS spending on all credit cards amounted to almost €837 million.
  • During 2015, the value of gross new PoS spending per month was over two and a half times higher for debit cards than for credit cards. Gross new spending on credit cards has remained broadly stable, averaging €846 million over the ten months to end-October 2015. However, PoS spending on debit cards increased by circa €322 million since January 2015, amounting to over €2.1 billion in October (Table 1).  The majority of debit card expenditure occurs in the retail sector, with transactions valued at over €1.1 billion recorded in October.
  • The expansion of e-commerce has been facilitated by the widespread use of both credit and debit cards.  A proxy for internet related expenditure using transactions where the physical card is not present is shown in Chart 2.  Debit card expenditure has generally trended upwards since April, following a seasonal low in February 2015. At end – October debit card e-commerce stood at almost €633 million.  In contrast, total credit card e-commerce has been relatively stable over the last ten months, averaging transactions valued at approximately €285 million.
  • Credit or debit card expenditure outside Ireland (when the physical card is present), provides a good indicator of tourism abroad for Irish residents. In general, the value of debit card expenditure outside Ireland is greater than the equivalent credit card transactions (Chart 3). Total debit card expenditure outside Ireland increased from just under €200 million in February to a peak of €335 million at end-July 2015, highlighting foreign holidays in summer. Over the same period, credit card expenditure rose by €47 million, amounting to €205 million at end-July. The larger debit card expenditure reflects the inclusion of ATM transactions.
  • Personal new credit card spending is primarily concentrated in both the retail and services sectors (Chart 4). The services sector is dominated by transactions in transport (40 per cent) and accommodation (24 per cent).  At end-October 2015, expenditure relating to both transport and accommodation amounted to some €132 million. Conversely, retail spending typically accounts for approximately half of total PoS debit card expenditure.
  • Chart 5 provides a distribution of outstanding balances on credit card accounts as a percentage of credit limits. The chart applies only to accounts where interest charges apply – i.e. accounts with zero interest balances, including those who pay in full during each payment cycle, are excluded.  The chart shows that approximately 12 per cent of interest-bearing accounts had exceeded their credit limit in April, although this figure declined to 8.5 per cent at end-October.  Exceeding credit limits is an early indicator of financial difficulties. A further 37 per cent of accounts had balances between 76 and 100 per cent of the credit limit at end-October. 

Note:

The primary aim of the data collected in the CDR (Credit/Debit Card Return) return is to inform national and euro-area policy making, and to enhance understanding of the role of credit/debit cards in the domestic financial system. Only euro-denominated credit/debit cards issued to Irish residents are included in the compilation of the CDR data.  Monthly CDR data is derived from a sample of reporting entities heavily engaged in the provision of credit/debit services to Irish residents.

The CDR sectoral breakdown is compiled referencing the MCC code system for credit/debit card transactions.  A merchant category code (MCC) is generally a four-digit number assigned to a business by credit card companies (e.g. American Express, MasterCard or Visa) when an entity first begins to accept one of these cards as a form of payment. The MCC is used to classify the business by the type of goods or services it typically provides.