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Blog: 15 February 2017 (Credit Card Transactions of South Africans)
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In today's blog we take a look at South Africans' spending on credit cards. How many transactions takes place each month and what is the average amount spent on these transactions. We take a look below.
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SA consumers happy to pull out the credit card.
The bar chart below shows both the number of credit card transactions (the blue bars and left hand axis), as well as the total value of all of these transactions (red bars and right hand axis). While they do largely move together this only tells half the story. As the value of transactions is not adjusted for inflation. Therefore it shows nominal prices instead of real prices. In order to gain a deeper understanding of the underlying trend in credit card spending, one needs to look at value spent after adjusting for inflation. In order to determine of the growth in spending on credit card's is underlying growth or growth fuelled purely by inflation.
As the graphic shows in the months of 2016 that are available South Africans spent on average R26.2billion per month on their credit cards averaging 45.3million transactions per month. This provides an average spend of R579 per transaction (not adjusted for inflation). Gone is the notion that credit cards are used in emergencies to pay or to pay for big ticket items. It's clear that South African consumers are struggling to keep their heads above water and are using credit cards more and more for every day goods and services. See CPI weights for average goods and services bought by South African consumers .
The graphic below calculates the average rand value per credit card transaction (after adjusting the spending for the effects of inflation). Our base price period is January 2010. So all price movements since January 2010 has been removed in order to obtain the underlying trend in the data excluding the effects of inflation.
The graphic below calculates the average rand value per credit card transaction (after adjusting the spending for the effects of inflation). Our base price period is January 2010. So all price movements since January 2010 has been removed in order to obtain the underlying trend in the data excluding the effects of inflation.
As can be seen from the graph above the average Rand value spent per transaction on credit cards after adjusting for inflation has been declining steadily over the years. We also see a significant spike in the Rand value per transaction over December periods as consumers use their credit cards to buy expensive gifts for loved ones. And then a significant drop off in Janaury and February as consumers attempt to recover from the spending binge in December.
We believe this is due to more and more consumers using their credit cards to pay for daily goods and services consumed by households and is a sign of the tough economic times experienced by consumers. The average value spent per transaction has dropped by roughly 25% from 2010 to latest available data in 2016.
Part of the decline can be explained by credit cards becoming more accessible to consumers (with even Capitec rolling out credit cards now), and ease of use with more and more stores having card machine facilities so less need for consumers to carry cash around with them.
We believe this is due to more and more consumers using their credit cards to pay for daily goods and services consumed by households and is a sign of the tough economic times experienced by consumers. The average value spent per transaction has dropped by roughly 25% from 2010 to latest available data in 2016.
Part of the decline can be explained by credit cards becoming more accessible to consumers (with even Capitec rolling out credit cards now), and ease of use with more and more stores having card machine facilities so less need for consumers to carry cash around with them.