Spending through Paymark’s network has increased 33% in five years

In the last five years, the combination of a stronger housing market, strong tourism, relatively low oil prices and strong uptake of contactless cards has tended to support stronger spending through the Paymark network. This year started with 3 out of the 4 driving forces intact.

January experienced relatively strong spending growth, especially outside of the major centres, with underlying spending through Paymark increasing 1.8% in seasonally adjusted terms since December.

However, one trend of recent months has been rising petrol prices. This showed in Paymark figures in January as a 1.7% seasonally adjusted increase in spending through fuel retailers. Noticeably the annual growth rate for the sector at 6.3% was the fastest recorded in 35 months amongst these merchants.

This rise in fuel prices does not appear to have dampened spending elsewhere to date, given that underlying spending excluding fuel also increased a strong 1.7% in seasonally adjusted terms over January.

The annual growth rate across all sectors did dip below the average of 2016 in January but this was the result of changing days within months rather than a fundamental slowdown in spending growth. The annual underlying growth rate for January was 6.1% versus a 6.7% average for 2016.

The day-of-week effect especially shows in Auckland/Northland and Wellington where the annual underlying spending growth rate slipped slightly to 5.4% and 4.8% respectively. Conversely spending generally accelerated outside these major centres, with fastest annual growth recorded in Hawke’s Bay (+11.1%), Bay of Plenty (+10.4%) and Otago (8.9%).

PAYMARK All Cards Data (Jan 2017 versus same month 2016)
Volume Underlying* Value Underlying*
Region transactions millions Annual % change transactions $millions Annual % change
Auckland/Northland 38.87 5.8% $1,934.0 5.4%
Waikato 7.93 7.0% $361.2 6.3%
BOP 7.57 10.2% $363.1 10.4%
Gisborne 1.06 8.9% $45.0 7.7%
Taranaki 2.21 3.9% $98.2 5.0%
Hawke’s Bay 3.22 12.2% $146.6 11.1%
Wanganui 1.10 6.8% $45.4 6.4%
Palmerston North 3.18 7.6% $153.0 8.0%
Wairarapa 1.00 7.3% $44.5 7.2%
Wellington 9.80 5.4% $429.7 4.8%
Nelson 2.26 6.4% $110.3 4.0%
Marlborough 1.22 0.5% $64.8 0.2%
West Coast 0.69 6.0% $36.3 5.9%
Canterbury 10.92 6.6% $529.2 4.8%
South Canterbury 1.52 5.8% $75.6 5.0%
Otago 5.92 8.9% $309.4 8.9%
Southland 2.15 6.1% $111.0 7.1%
New Zealand 101.43 6.6% $4,910.2 6.1%
* Underlying spending excludes large clients moving to or from Paymark within last 12 months

Figure 1: Paymark All Cards data (January 2017 versus January 2016)

Stepping back and looking at longer term trends, the value of spending through Paymark has increased 33% over the five years between 2011 and 2016. The Paymark figures reflect some of the strong macroeconomic trends of the last five years, plus the gaining popularity of contactless cards.

A sector breakdown shows a spending growth rate close to the national average for combined Core Retail sectors and, within that grouping, for the Food and liquor sector. But elsewhere the spending trends varied.

The Hardware and furniture sector saw 49% more spending through the Paymark network, with extra spending growth coming from the average spend per transaction rising 13% over 5 years to $97.64. These trends are consistent with the strong housing market in recent years.

In contrast, spending increased only 16% within the Clothing and footwear sector, largely due to weak growth in the number of transactions. Low growth in the number of merchants did mean, though, that growth in spending per merchant in this sector at 11% was not far behind the all-sector 5-year growth rate of 13%. Online competition is likely to be a key influence on clothing merchants.

Also within the Core retail grouping, spending growth was strong in the Accommodation sector (+58%), with contributions from more transactions and higher spending per transaction, the latter up 17% to $117.27 over 5 years. The resulting strong 34% growth in spending per merchant is one measure of the effect of the strong tourism growth experienced.

Even higher 5-year spending growth was recorded within the Food and beverage services sector (+64%), with accompanying strong increases in the number of transactions, the number of merchants and the annual spending per merchant. General economic growth and strong tourism growth are key driving forces here as well but the transaction growth rate in part reflects strong uptake of contactless cards in this sector.

Outside of the Core retail grouping, spending through Paymark at Fuel retailers increased a mere 2% in 5 years, the quantum of spending dampened by the fall in fuel prices over the period.  Lower fuel prices are likely to have allowed more budget allocation to spending in other sectors.

Annual spending ($millions) Average value ($/transaction) Average value ($m/merchant)
2016 5yr 2016 5yr 2016 5yr
Food/liquor $15,676 34% $38.19 -2% $1.91 12%
Furniture/hardware $4,927 49% $97.64 13% $0.82 34%
Clothing/footwear $2,708 16% $83.21 8% $0.57 11%
Accommodation $1,488 58% $117.27 17% $0.52 34%
Food/beverage services $7,429 64% $22.30 2% $0.49 27%
CORE RETAIL $38,881 35% $40.80 -1% $0.81 16%
Fuel retailing $4,902 2% $44.49 -9% $4.50 8%
Non-retail $12,478 43% $96.47 5% $0.44 18%
TOTAL PAYMARK $57,397 33% $47.90 -1% $0.72 13%

Figure 2: Spending through Paymark in 2016 and change since 2011 for selected sectors

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