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Canucks Tamp Down Card Spending in Face of Global Uncertainty

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Canadian credit card users are in “moderation” mode as card spending is up a modest 3.46% for the first three months of 2017, compared to the same period in 2016. In the U.S. card usuage if up 4% and in the U.K. up 9%, compared to one-year ago.

According to the MonerisMetrics Quarterly Report released by Moneris Solutions, while overall spending is up, the quarter’s results continue a trend of gradually slowing growth, suggesting that 2017 may be a year of moderate spending when compared to 2015 and 2016.

MonerisMetrics Quarterly Report – Q1 2017 (CNW Group/Moneris)

March was the strongest month of the quarter, demonstrating growth of 4.44% over the same month last year. January posted 3.68% growth year over year, while spending in February was on par with 2016, at only 0.47% growth.

This modest rise in spending is in line with other recent economic indicators, with Statistics Canada posting slight increases in GDP1, average weekly earnings and retail sales, all during the January time period.

From a regional perspective, Quebec and New Brunswick led the country’s spending growth, with increases of 5.49% and 4.59% respectively. British Columbia and Ontario also posted stronger than average growth, with increases of 4.26% and 4.18% respectively. By contrast, Alberta and Newfoundland continued regional trends of negative growth – spending in Alberta was down 0.72%, and spending in Newfoundland was down 1.68%.

Credit cards continued to dominate the share of spending in the first quarter, representing 64.8% of transactions, with debit cards representing the remaining 35.2% of transactions. Spending on credit cards increased by 4.85% over the first quarter of 2016, while spending on debit cards increased by a slightly smaller volume, at 0.98%.

2017 has seen continued growth in the use of contactless payments by Canadians. The volume of “tapped” dollars increased by 62.17% during the quarter, while the total number of contactless transactions increased by 51.43% over the same period in 2016. The 62.17% increase in contactless dollar volume signifies a notable change in growth patterns when compared to previous quarters that have seen triple digit growth in this area.

Contactless transactions accounted for 38.03%of all transactions made during the quarter, compared to 27.14% during the same period in 2016.

Canada’s low-dollar continued to drive year-over-year increases in foreign spend. The amount of dollars spent on foreign cards in Canada grew by 6.06% over the same period last year, as Canada remains a desirable destination for cross-border shopping and tourism.

Visitors from the U.S. were the top foreign spenders this quarter, spending 4.3% more compared to the same quarter last year. As with last quarter, spending on cards from China and Australia were the second and third highest contributors to foreign spending growth by volume with year-over-year increases of 8.51% and 25.40% respectively.

Mexico was the fourth highest contributor, achieving 20.95% growth this year over the first quarter of 2016. Mexico’s growth coincides with recent changes to visa requirements for Mexican travelers to Canada, and is consistent with Statistics Canada data from January, which indicated Mexican tourist visits were up 56% over the same month in 2016.

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