From the annals of Ritchiedom

A fall in the monetary volume of purchases on Visa cards and a rise in the number of transactions shows that, umm, the apocalypse is just around the corner. From the FT:

Visa said consumers spent less during the quarter as the global recession inspired greater thriftiness, resulting in a 7 per cent decline in year-on-year cash volumes to $969bn.

However, the number of processed transactions grew as consumers increasingly used their cards in preference to cash or cheques. The total number of processed transactions was 10.3bn in the quarter, an 8 per cent increase year-on-year.

Ritchie\’s analysis:

Let’s translate this: a) people know they’re in trouble so are spending less on big ticket items but b) they’re paying for more and more smaller, everyday, and even essential items on credit. Which means they’re putting off the day of reckoning when they just can’t pay the debt.

Let\’s try an alternative explanation. From Visa\’s (Europe) previous quarter\’s results:

Ecommerce continued to grow strongly with a 26% increase in transactions proving online retailers are winning market share from other retailers. The number of transactions on debit cards also grew very strongly by 14%.

Ah: we\’ve a structural change in where people buy things meaning that we\’ve a structural change in the method people use to pay when buying things. Note also that debit cards do not imply credit being used.

Hey, your brain cells, your choice.

10 comments on “From the annals of Ritchiedom

  1. From the anus of Richie more like – like pretty much everything that bloke comes out with. I have a reward card scheme and put everything I possibly can on my card.

  2. “I have a reward card scheme and put everything I possibly can on my card.”

    Ditto. And credit cards come with way more consumer protection than debit cards(e.g. against supplier going bust). You’d be daft to buy a concert ticket or a holiday on anything but a credit card (don’t people remember Zoom airlines?).

  3. Richard needs to get his highly judgemental head round the fact that Visa and Mastercard don’t grant credit and so there’s not much point reforming them.

    They provide authorisation and settlement networks services, licence the brand name to banks and other lenders to use on their card products, and create / enforce the standards around issuance and acceptance of cards so cardholders, get the same deal wherever they use the card. All absolutely essential activities for a payment system to work and have value in a global age. And they take a slice off the top of every transaction.

    If His Holiness Murphy hasn’t cottoned on to those most basic of all payments systems facts, the rest of his supposition is meaningless.

  4. Richard needs to shove his head up his own arse. Apart from anything else his mouth would then be a lot closer to the source of what he speaks.

  5. It’s worth noting that Our Dickie somehow forgot to back out debit card transactions (and fees)(and profits) before launching his screed. Last time I checked, a debit card was a check substitute, not a credit card.

    I’m still of the opinion that he’s latched onto a pile of weapons-grade methamphetimine.

  6. Economic commenters seem to me, since 2008, to be the blind leading the blind and missing the big picture – end fractional reserve banking and issue debt free treasury notes to pay off the debt, balanced by progressively higher reserve requirements. That’s the start. Then CBI.

  7. I have noticed a lot of small transaction in the past year, packets of cigarettes, or a couple of low value groceries. However I don’t know if this was a trend or not.

    What did surpise me though was that the shopkeeper accepted the card for payments. Cigarettes have a very low margin and I would have thought the transaction cost would have made the sale unprofitable.

  8. Unless card spending is for food, clothing or shelter then all card spending is no less essential than the above. One person’s essential flat screen tv is another person’s essential virtual pet. (Granted, I’d take the flat screen tv myself, but my tv is no more essential to me than someone else’s e-Spot-The-Dog is to them)

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