Green shoots seen in growing card usage

More shoppers are using credit, debit and charge cards. Photo / Hawke's Bay Today

Credit card company MasterCard says it sees positives for an economic recovery in the latest March numbers from the Reserve Bank and Statistics NZ.

March's 10.9 per cent monthly increase in the value of all electronic transactions, including debit, credit and charge cards, was the largest non-December monthly growth since March 2007.

Total value grew to $5.1 billion for the month. That was across 97 million transactions - up 10 million or 11.5 per cent on February - which was the third highest monthly transaction volume on record and the highest outside of a December.

That showed a clear increase in consumer sentiment across a wide range of indicators. It was encouraging to see strong growth in transactions from February to March, said MasterCard New Zealand manager Stuart McKinlay.

"These solid upward movements are positive signs of recovery particularly in terms of New Zealand consumers' sentiment," he said.

This, in turn, was having a positive effect on credit card transactions as well, albeit at a slower rate of recovery.

Annualised growth rates of the value of all electronic transactions and credit card activity showed both have been on an upward trajectory since the last months of 2009, but credit cards were recovering at a much slower rate.

They remained in negative territory based on the same rolling 12 months last year, but they were edging closer to positive growth.

The combination pushed the proportion of electronic transactions made by credit cards down over time, from 58 per cent in August 2005 to 51.56 per cent in March.

The average transaction value (ATV) for electronic transactions has been dropping because cardholders are generally more comfortable using debit cards for lower value transactions.

The ATV in New Zealand over the past 12 months was now $52.25 but as recently as April 2007 it sat at $55.53.

Balances on consumer cards, which are delayed by one month, fell in February by 1.6 per cent, down $82 million to $5.1 billion.

Credit limits grew by $17 million in March to $17.6 billion. That is the fourth straight consecutive monthly increase, but follows six consecutive reductions in credit limits causing an overall decline in credit limits for the year to the end of March of 0.76 per cent.

This was likely to indicate banks tightening their unsecured lending policies rather than consumers reducing their total borrowing potential, McKinlay said.

- NZPA