U.S. consumers ready and willing to spend more now than before Covid, Mastercard CFO says
- Consumer spending in America is on pace to exceed pre-pandemic levels, Mastercard CFO Sachin Mehra told CNBC.
- Covid stimulus and increased savings continue to be a catalyst for spending, he said.
- Mehra said an "aversion to cash" is leading to an increase in digital payments.
Mastercard CFO Sachin Mehra told CNBC that consumer spending in America is on pace to exceed pre-pandemic levels, based on data from the company's second-quarter earnings report.
The payments giant reported Thursday that gross dollar volume, a metric that reflects purchase activity, increased almost 34% year over year in the U.S. to $619 billion. That's a 27% from the same quarter in 2019.
"People are looking to spend and they are exercising that intent right now." Mehra said in an interview Thursday. "Does the stimulus play a part in that? Absolutely. Does the high level of savings which are there across the board play a part in that? Totally. At the end of the day, people are exercising their intent to spend. That is something we are seeing. And we haven't even seen travel come back to the levels we used to see pre-pandemic."
Spending trends also point to increased consumer confidence in the economic recovery, Mehra said.
"Last 12 to 18 months, it was more on nondiscretionary categories, the groceries, the utilities, the things of that sort. We are starting to see that now shift towards discretionary categories, more on travel, more on lodging, more around restaurants," he added. "You are starting to see higher growth rates in credit. Debit is growing at a very healthy rate as well."
Mastercard on Thursday beat estimates on revenue and profit.
On the earnings call, CEO Michael Miebach said in-store spending is returning but there is a "secular trend against cash," which is a catalyst for its digital payments businesses.
"The aversion to cash will drive contactless because it's a cleaner form of payment." Mehra said. "Contactless has been on an upwards trajectory even pre-pandemic. People have seen the convenience that it presents, and it has only accelerated. The U.S. has always been a laggard when it comes to contactless, but that's changing. The aversion to cash is one component. It's just a good user experience."