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The card network’s US switched volume grew 3% year-over-year (YoY) in the week ending June 14 and 5% YoY in the week ending June 21, marking a major recovery from the negative growth it posted in several previous weeks thanks to the coronavirus pandemic, per a press release.
And Mastercard’s switched volume outside the US fell just 5% YoY in the week ending June 21, a serious improvement from its 19% YoY drop in the week ending May 7, meaning this bounce-back isn’t isolated to the US market. This points toward a global increase in spending, since Mastercard accounted for 24.5% of global card brand purchases in 2018, per The Nilson Report.
The relaxing of social distancing requirements is a key factor in Mastercard’s recovery, so its performance should improve as more businesses reopen, while an uptick in coronavirus cases could negate its progress. States throughout the US are enabling retailers, restaurants, and personal service providers to reopen, creating more opportunities for consumers to make purchases and potentially giving more workers wages to spend.
As states and countries around the world reopen, more industries, including travel, could start to bring in more volume, boosting Mastercard’s volume and overall global spending. But with cases spiking in several US states, it’s possible spending’s recovery will be reversed if governments choose to close down industries again and if retailers follow Apple’s lead by reclosing some stores.
As spending picks back up, merchants will likely debut promotions to make up for lost sales and boost customer loyalty to drive consistent revenue in uncertain times.
Consumers appear to have an appetite for sales holidays as spending recovers, so merchants may create new events in the coming months to rack up sales. Alibaba and JD.com both posted huge sales numbers for the 618 sales event in China, which runs from June 1-18, and merchants can try to drive sales themselves by offering their own discounts and promotions as part of an existing or new event. Amazon is already trying this tactic with its new Big Style Sale, showing how merchants can potentially highlight a specific category with their sales — in this case, apparel — though merchants can run broader promotions if that better fits their offerings and needs.
Merchants should be looking to incentivize consumers to sign up for subscriptions and loyalty programs as spending picks up to drive revenue in the future. If consumers are part of a loyalty program, they may be more likely to shop with a merchant going forward because they’ll have access to perks …read more
Source:: Business Insider