Credit-Card Purchases as a Short-Term Indicator

1. Credit-Card Purchases as a Short-Term Indicator Presented by : Yoel Finkel Central Bureau of Statistics, Israel OECD STESEG Meeting, Paris, Sept. 2009

2. Credit Card Purchases • Credit card payments, are rapidly becoming the most prominent way for customers to pay for their shopping. • A growing number of shoppers are replacing cash money transactions with the convenience of credit cards. • Cards are a safer and more convenient alternative to drawing cash money.

3. Number of cards issued per capita, by country Source: Israel - Bank of Israel (cards in use) and CBS EU countries: ECB (European Central Bank), http://sdw.ecb.europa.eu/servlet/desis?node=1000001455

4. Cards, in particular debit cards, are increasingly replacing cash and cheques Relative importance of payment instruments: Card payments (percentage of total number of national transactions) Euro Area Total http://www.ecb.int/stats/payments/paym/html/payments_p_2007.en.html The euro area total covers the EU Member States that had adopted the euro at the time to which the statistics relate

5. Cards, in particular debit cards, are increasingly replacing cash and cheques Source: http://www.ecb.int/press/key/date/2006/html/sp060920.en.pdf

6. Credit Card Purchases • The Credit Card Purchase index series is a monthly indicator published by Israel Central Bureau of Statistics from 2002 • Credit card purchases by private consumers in 2008 accounted for 37% of the total private consumption that year*. *Bank of Israel information on Israel’s banking system, http://www.bankisrael.org.il/deptdata/pikuah/shotef/eng/chapje.htm

7. NUMBER OF CREDIT CARDS USED IN ISRAEL (millions) Source: Bank of Israel

8. Isracard, Leumi Card, Cal • There are 3 companies who issue credit card in Israel, a small and crowded market and therefore • Data are confidential. • Publishing the aggregate market share is forbidden. • ICBS publishes only indices (base year 2002 = 100)

9. Indices in Constant Prices In order to generate indices in constant prices the accumulated purchases in each division are deflated by the relevant CPI item. Publishing of Data Indices of Credit Card Purchases at constant prices, seasonal adjusted and trend indices are published monthly, with a lag period of 20 days from the end of the month.

10. Credit card purchases - divisions According to Credit card companies reports, there are 4 type of Sectors, each sector is divided into sub-sectors (divisions):

11. Israel statistics Credit card purchases in 2008, by division

12. Israel statistics Percentage of annual growth, 2008 original data, constant prices

13. Israel statistics Percentage growth in Jan-June 2009 (compared to the same period the previous year ) Seasonally adjusted data, constant prices

14. Israel statistics Credit card Purchases index Jan-June 2009 Seasonally adjusted data, constant prices • The highest increase for a sub-sector was 22% in computer and software index, compared to the same period in 2008 • The largest decrease for a sub-sector was 3% in flight and tourism index, compared to the same period in 2008 • The largest increase for a sector was in Manufacturing • products with a 6% increase in the Credit card purchase index, compared with the same period in 2008.

15. Israel statistics Credit Card Purchases vs. Chain stores goods Sales • Credit card purchases include services such as: Insurance, flight and tourism, leisure and entertainment, municipally and government services while Chain stores sales relates to goods only • “Food sales” includes restaurants in credit card statistics but not in chain stores statistics • Chain stores includes only big stores while Credit card includes all kind of stores.

16. Israel statistics Seasonally Adjusted, Total Sales Value Indices of Chain Stores and Credit Card at Constant price Base: 2002=100.0 Credit card Purchases VS. Chain stores goods Sales

17. Israel statistics Seasonally Adjusted, Food Sales Value Indices of Chain Stores and Credit Card at Constant Prices Base: 2002=100.0 Credit card Purchases VS. Chain stores goods Sales

18. indices 180 170 160 150 Credit card purchases 140 Private consumption without 130 housing 120 110 100 90 1 4 3 2 1 4 3 2 1 2003 2006 2009 Israel statistics Seasonally Adjusted, at Constant Prices Base: 2002=100.0 Credit card Purchases VS. Private consumption

19. Issues in Credit Card Expenditures (why the numbers may differ) • Credit cards are now being used for many secured payments thru the web • Payments with installments • Increase of credit cards issuances per capita • Services and not just goods • Including dining • All outlets vs. chain stores

20. Issues in Credit Card Expenditures (why the numbers may differ) • Therefore we see a higher increase in the credit card index than the chain store index and private consumption index. • Latest reports by the cc companies show that while the average amount per transaction has gone down, the increase in number of transactions compensated for this and total consumption increased.