Credit and Debt Transactions Recovering Slowly

After a sharp drop off during the height of the pandemic, the use of credit and debit cards is recovering across the country, new data shows.

In an article by El Economista, data shows that 14.9 million transactions were made with credit and debit cards on Nov. 14 and Dec. 19 against the 14.6 million transactions occurred on Mar. 14.

Debit cards had a quicker recovery in use, likely due to the easier access to debit cards and consumers’ cautiousness around spending on credit amid the pandemic. Debit card use only went above the Mar. 15 marker of 11.38 million transactions on Aug. 16, when 11.53 debit card transactions occurred. El Economista reports that the lowest debit card usage figure was on Apr. 13 when just 5.71 million transactions occurred.

But credit card use is also buoying. On Nov. 21, 3.59 million credit card transactions were registered nationwide, the highest number since Mar. 13 when 3.42 million transactions occurred. These latest figures point towards the massive impact that the COVID-19 pandemic had during the middle of the year. Over a million jobs were lost in Mexico while civil organizations predicted that the country’s severe economic contraction would push millions more into extreme poverty. With the economy now on a slow path to recovery and the country’s vaccination program started, consumers appear more confident to spend again.

However, with the festive season now over, these figures could fall again. According to market intelligence firm Kantar, Mexicans buy an average of six gifts and spend, on average, MX$4,300 (around US$218) doing so. Without the same impetus to go out and spend, and with a handful of states now under maximum lockdown, transaction numbers could struggle.

The news from CNBV President Juan Pablo Graf that the banking sector is preparing further credit restructuring programs for individuals or businesses suggests that the community’s forecast is not particularly optimistic.

If further proof is needed of the bearish nature of outlooks, Grupo Financiero Banorte, one of Mexico’s largest banking groups, today reported to the CNBV that the second wave of infections had pushed the bank to take additional protective actions to safeguard the bank ahead of a potential deterioration in its financial standing. The bank has increased its reserves to guarantee that it has sufficient funds to cover any defaults or non-payments of users.