Payment Related

Impact of the new corona on the credit card industry on consumption

The spread of the new coronavirus infection has had a major impact on people’s consumption behavior. Most of the effects are bad, but there are also good ones.

With the advent of the full-scale cashless era, the credit card industry, which has been increasing its presence, has also been greatly affected.

With the growth of nesting consumption and online shopping (EC), credit card companies that are strong in that field will have been enriched. However, some credit card companies have suffered headwinds due to the decline in overall consumption due to refraining from going out, refraining from sightseeing, and refraining from eating out.

The state of the credit card industry will be an important material for predicting future consumption trends.

Degree of decline in personal consumption due to corona

The Nisseikiso Research Institute published a report in November 2020, summarizing that personal consumption has fallen sharply due to the corona disaster and that recovery is at a standstill (* 1).

The consumption items that have been particularly hit are as follows.

  • Railroad
  • Aviation
  • Drinking
  • Suit
  • Travel / Accommodation
  • Movies / Plays
  • Amusement Park
  • Cosmetic

However, the exceptions to the sluggish corona consumption were the following nesting-related consumption.

  • Food
  • Game
  • Computer
  • Food delivery
  • Health consumables such as masks

In particular, food delivery has almost doubled in 2020, up 97.6{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} from the previous year. The consumption trends captured by the Nisseikiso Research Institute may not be close to the actual experiences of many consumers.

And the same tailwinds and headwinds are blowing in the credit card industry.

(※1)Trends in household consumption of corona sickness-What is the current state of increased nesting consumption and drastic decrease in out-of-home consumption?

Relationship between Creca and Corona

The relationship between the credit card industry and Corona is summarized as follows (* 2).

  • Overall credit card usage declined due to lower overall consumption
  • Credit card usage for big purchases over 10,000 yen has decreased
  • Increased use of credit cards for small purchases of several thousand yen or less
  • Increased use of credit cards linked to e-commerce such as online shopping

According to the Ministry of Economy, Trade and Industry, the transaction volume of card shopping using credit cards in 2020 decreased by 2{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} from the previous year, and the influence of the corona disaster became clear.

However, the number of settlements using credit cards is increasing.

The reason why the number of settlements is increasing despite the decrease in transaction volume is the small amount of credit card purchases. The average unit price per purchase using a credit card was 4,983 yen in 2020, a decrease of 10{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} from the previous year. A consumption style emerges in which people do not make big purchases but increase small ones.

For example, if the number of trips of tens of thousands of yen decreases and the number of online purchases of daily necessities of several hundred yen increases, this result will be obtained.

(※2)EC-based rapid growth due to “small-lot” card consumption Major companies such as Saison struggle

New credit card-related service created by Corona

The credit card industry has new services created by the Corona War.

Seven & i Holdings has introduced a contactless payment system such as credit cards. Simply hold it over the card reader installed next to the convenience store cashier, and you do not need to enter your signature or PIN (* 3).

In addition, the law has been amended to allow credit card companies to use AI (artificial intelligence) when setting credit lines.

Setting a credit line is to set a credit card limit. Since AI will streamline operations, you can quickly set credit lines. In other words, we can expect an increase in credit card users and an increase in shopping using credit cards.

(※3)Increase in credit card issuance due to corona damage?

Credit cards that caught the nest are doing well

Among the light and dark of the credit card industry, the one that has become clear is the credit card company that has been able to meet the needs of the nest.

The credit card transaction volume of Rakuten Card and Z Holdings (ZHD), which owns Yahoo Shopping and PayPay, increased by 20 to 30{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} from the previous year in 2020 (* 2).

Both Rakuten and ZHD are e-commerce giants, and can directly benefit from the behavioral changes of consumers, such as “buy what you need at home online” and “pay with a credit card if you buy online”. I did.

Aeon Financial Service, Credit Saison, and JACCS, major credit card companies, are experiencing year-on-year declines in credit card transaction volume in 2020, which shows how strong the tag of “e-commerce and credit cards” is. increase.

Aviation credit card performance deteriorates

The aviation credit card was hit hard by the Corona disaster (* 4).

Since aviation credit cards such as ANA Cards and JAL Cards are related to airplanes, the use of them has been reduced due to the refraining from business trips, travel and sightseeing due to the Corona disaster. For airlines, the passenger transportation business, which is their main business, is also sluggish, and it looks like a double punch.

(※4)An aviation card that malfunctions

What Corona’s Credit Cards Brought to Consumption

How has Corona’s credit card changed overall consumption? Sumitomo Mitsui Card Co., Ltd. published the “Third Report on Changes in Consumption Behavior Caused by the New Coronavirus” in December 2020 (* 5).

According to it, 30{5f3ac39ba1b9031997b955ac72c92bb5456d725b06fa10f02cdda1ab745591c7} of the credit card payment amount was related to e-commerce. The company believes that e-commerce purchases have increased since the period of self-restraint, and credit card usage has increased accordingly.

Many consumers are concerned about using credit cards, “I don’t feel like I’m spending money, so I’m likely to overuse it.” This concern is a negative factor for the credit card industry, but behind the scenes is the feeling that “I understand the convenience of credit cards.”

Therefore, the credit card industry can be considered to have room for growth. If overuse can be suppressed, consumers will be able to enjoy the convenience of using a credit card.

Strangely, Corona’s scourge seems to have made some consumers realize that the convenience of credit cards outweighs overuse concerns.

(※5)Report on changes in consumer behavior brought about by the new coronavirus

Summary-Let’s see Corona’s evil as the flow of the times

While the corona wreck has hit consumption, it has brought about a change in demand for nesting, and the impact has spilled over into the credit card industry.

However, it did not simply mean “increased demand for nesting → revitalization of the credit card industry”, but “increased demand for nesting → increased e-commerce → revitalization of the credit card industry”, with e-commerce in between. ..

As a result, credit card companies that were focused on e-commerce were able to benefit. If you dare to think of the corona wreckage as the “flow of the times,” it seems that companies that follow the flow of the times will have an advantage.