Dec 20, 2019

A record for out-of-store spending

Illustration of a credit card as a shopping cart

Illustration: Aïda Amer/Axios

Americans are now spending nearly as much money remotely as they are in person.

Why it matters: It's a nod to the e-commerce boom, where corporate giants like Amazon and other businesses that bulked up their online presence are cashing in like never before.

What's happening: For the first time, the value of online purchases with debit and credit cards in 2018 nearly equaled that of in-person card spending, according to a new report from the Federal Reserve, which cites the latest data available.

What they're saying: The boom in remote buying is "driven by growing e-commerce and the use of cards for recurring bill payments," Fed researchers write.

  • And the upward trend paired with a strong consumer likely means 2019 was the first year that the value of remote card purchases surpassed in-person card payments.

The data doesn't include cash payments, which account for a bigger share of in-person transactions than cards do, per a separate Fed report.

Yes, but: While the gap in card spending in-person vs. remote has closed in dollar terms, the number of card transactions done in-person still far outpaces those done online.

By the numbers: 72% of purchases made with a card were done in-person, while just 28% of those transactions were made remotely.

  • While mobile wallets have made it easier to pay by card in stores, the number of in-person purchases has still steadily decreased from 84% of all transactions in 2012.
  • Those done online have steadily increased from 15% in 2012.

Between the lines: That means that spending at brick-and-mortar stores isn't completely dead, though people are spending less money there.

  • To appeal to all shopping tastes, store operators (retailers and beyond) are stretched between heavy investments in online platforms or delivery perks and investments in physical stores.
  • Take Walmart, for instance, which is revamping 500 of its stores and opening 20 more, as part of an $11 billion investment plan. At the same time, it's planning to "aggressively scale" an in-home grocery delivery service.

The bottom line: Where consumers spend the bulk of their dollars is changing. But considering the vast number of card transactions still done in stores, American card spending habits haven't completely shifted to one side or the other yet.

Data: The Federal Reserve; Chart: Andrew Witherspoon/Axios

From 2012 to 2018, the value of card payments done remotely jumped nearly four times the value of in-person card transactions.

Go deeper:

Go deeper