Five charts to start your day

Americans are ditching cash for plastic

When the pandemic unfolded, a silent revolution swept across US commerce. Credit card swipes replaced the rustle of cash. Or a least that is the narrative that we have been told. Lockdowns accelerated digitalisation, and so they also increased the popularity of digital payments.

However, this first chart from the Financial Times shows that this trend predates the Pandemic quite considerably. This shift is backed by data from the Federal Reserve which shows a significant increase in credit card use: purchase volumes increased 51% and transaction values rose 60% between 2015 and 2021.

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1. Credit card purchase volumes surge post-Pandemic

Source: The Financial Times

This rising trend of credit card usage has been challenging for small businesses. They've been grappling with the high costs associated with accepting credit card payments, known as "swipe fees." According to the Nilson Report, last year alone, US merchants paid a record $160.70 billion in processing fees to accept $10.6 trillion in card payments, with a whopping 79% of these fees stemming from credit card transactions.

In a bid to mitigate these rising costs amid already narrowing profit margins exacerbated by higher inflation, a growing number of businesses have started passing on some of these costs to their customers.

The idea of going cashless, though modern and convenient, comes face to face with the reality of higher operational costs, forming a complex scenario in the ever-evolving financial landscape of pandemic-hit America.

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