A pull back in credit and debit card spending across Canada continued in the second quarter of 2018, with growth of 3.3 per cent marking the lowest quarterly increase in nearly four years, according to a report by payments processor Moneris.
The results come amid high household debt and rising interest rates, and mirror recent Statistics Canada data showing that retail sales in April fell 1.2 per cent – the largest drop in more than two years.
After reaching a 20-year high last year, retail sales have moderated across all major sectors, reflecting slower GDP growth after a break-out year in 2017 when the economy expanded by more than 3 per cent.
The Moneris report says April was the weakest month of the second quarter with payment card spending in dollar terms increasing 2.9 per cent year-over-year. Spending rebounded with improving weather in May and June to post growth of 5.9 and 3.1 per cent, respectively.
Credit and debit card charges for theatrical productions and fast food were among the strongest growth categories in the quarter.
All provinces saw spending growth with the exception of Newfoundland, which experienced a decrease of 2.4 per cent. British Columbia, Quebec and Ontario were the only three provinces to outpace the Canadian average, realizing year-over-year increases of 4.6 per cent, 4.2 per cent and 3.4 per cent.
“Looking at our data from the last three years, we’ve seen tapering, but steady, growth across the country,” said Moneris CEO Angela Brown. “This, in tandem with the Bank of Canada’s recent announcement of interest rate increases, demonstrates strength in the Canadian economy, and we anticipate stable spending growth over the coming months.”
The report says foreign card spending growth fueled by the United States, the United Kingdom and China increased 13 per cent across the country, despite a decrease in travel to Canada and a strengthened Canadian dollar.
The report also notes that contactless payment continues to surge one year after the introduction of Google Pay in Canada.
Nearly half of all transactions in the second quarter of 2018 were completed through a contactless payment option – the highest share since being introduced in Canada. Additionally, on a year-over-year basis, contactless dollar volume increased 33.9 per cent, and the number of contactless transactions grew 31.8 per cent.
Newfoundland, Nova Scotia and New Brunswick saw the largest contactless volume growth with increases of 42.7 per cent, 41.3 per cent and 39.4 per cent, respectively, the report says.