CardFlight Small Business Impact Report for June 10, 2020

Last week’s sales were 20.8% above the pre-COVID baseline, representing the largest single-week increase to date.

Introduction

Small business sales volumes for this week exceed the baseline week by 20.8%. This is only the second week in which sales have exceeded the pre-COVID baseline week of March 2-8, 2020 — and is the largest increase to date.

Last week, all the ways in which we report change experienced week-over-week growth, and most categories show positive growth over the baseline week. This was the strongest week for sales and transaction volume that we’ve experienced since coronavirus/COVID-19 was declared a pandemic.

Key takeaways from this week’s report

About this report

The CardFlight Small Business Impact Report is intended to provide insights into the impacts of coronavirus/COVID-19 on small businesses across the United States. The report has been featured in and/or cited by The Atlantic, Bloomberg TV, Business Insider, Digital Transactions, PaymentsJournal, PaymentsSource, and others. Learn more about the report and its methodology.

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Week-over-week changes

First we examine how coronavirus/COVID-19 is affecting small business sales by analyzing change in overall sales, number of transactions per business, and more.

Sales at small business up nearly 22% last week

Week-over-week sales at the small businesses in our sample were up 21.9% week-over-week, and are now 20.8% above the pre-COVID baseline week of March 2–8.

As we noted in last week's report, the dramatic increase in this week's week-over-week sales increase is due to seasonality and the sales slowdown we saw because of the Memorial Day holiday.

Transaction counts up 15% week-over-week

The total number of transactions in our sample grew by 15% over the previous week. The number of transactions the small businesses in our sample processed last week exceeded the pre-COVID baseline, now up 8.2%.

Number of active small businesses up 8% last week

The number of active small businesses (measured as all businesses who processed at least one transaction in the previous week) grew by 8% from June 1–7 compared to the preceding week. The number of active merchants is now less than 5% below the pre-COVID baseline, a marked improvement over the low of nearly 30% we reported in mid-April.

The average number of transactions per active merchant grew by 6.5% last week. This metric is now nearly 14% above the baseline week of March 2–8, 2020.

Card-present payments vs. card-not-present

The payments industry has two broad categories for transactions and where they occur.

  • Card-present payments are those that are initiated in-person (face-to-face). This includes all instances in which a credit or debit card is physically swiped, inserted, or tapped at a merchant location.
  • Card-not-present payments are those made over the phone or online. This category of payments also includes invoices and those merchants who save cards of their frequent customers on file.

At the onset of the coronavirus/COVID-19 pandemic, card-present sales decreased at a faster rate than card-not-present sales. That trend ended around the week of April 6–12, when card-present sales began to slowly gain ground week-over-week, ending the week of June 1–7 up nearly 4% over the baseline week.

Changing behavior as seen through contactless tap to pay

Next, we'll examine how coronavirus/COVID-19 is changing the manner by which consumers pay for their goods in-person. The three ways US consumers typically use credit and debit cards for in-person transactions are:

  • Dipping an EMV chip card
  • Tapping a contactless card or smart phone
  • Swiping via magnetic stripe


Since magnetic stripe payments are a relatively low proportion of our payment volume, we're focusing on chip cards and contactless tap. We found that overall, growth in sales made via contactless payment methods are outpacing those made via EMV chip.

Deep dive: Sales by business category

In this section of the CardFlight Small Business Impact Report, we take a closer look at small business performance by business category.

  • Food and drink establishments: Includes bars and restaurants
  • Service providers: General contractors, healthcare providers, providers of professional services, and others
  • Retail: Businesses like sporting goods stores, specialty retail, home furnishings, and automotive

Sales at food and drink businesses up 12.6% last week

Week-over-week sales at food and drink businesses increased by 12.6% last week, and are now 13% above the pre-COVID baseline of March 2–8, 2020.

Transaction counts also grew by a considerable amount, up 9.6% week-over-week, and up by more than 13% since the baseline week.

Retail sales above baseline by biggest margin since March 9

The retail businesses in our sample saw sales increase by 21.1% last week. At 14.6% above the baseline, the week of June 1–7 marks the biggest single-week increase over the baseline we've seen in our report so far.

Transaction counts in the retail category grew 15.1% week-over-week, and are now down by just 2.4% over the baseline.

Sales at services businesses up 9.6% last week

Businesses in the services category were up nearly 10% last week, and are now up nearly 16% over the baseline week.

The number of transactions in the services category also grew considerably, up 20.6% compared to the preceding week. Transaction counts in the Services category are now just 1% below the baseline week.

Business outlook

In this section of the Small Business Impact Report, we take a closer look at changes within different industries and business categories.

Businesses with the largest gains last week

  • Arts and creative goods: Sales up 44.8% last week; but still 52.5% below baseline
  • Entertainment and recreation: Sales grew 44.8% week-over-week; rebounded 6.7% above baseline
  • Healthcare: Up 32.4% last week; now 10.2% above baseline
  • Professional services: Largest weekly growth of 33.2% in the history of our report; now just 11.1% below baseline
  • Salons and barbershops: Solid weekly growth of 29.6%; now just 10.5% below baseline

Businesses with the largest rebound from their low point

  • Entertainment and recreation: Last week's sales 271.2% above their low (March 23–29); now 6.7% above the baseline
  • Healthcare: Sales 179% above their low (April 6–12); now 10.2% above the baseline
  • Food and drink: Sales 79.4% above their low (March 23–29); now 13.3% above baseline
  • On-site technical services: Sales 74.7% above their low (April 6–12); now 42.5% above the baseline
  • Automotive retail: Sales 67.3% above their low (April 6–12); now 6.6% above the baseline
  • Specialty retail: Sales 56.3% above their low (April 20–26); now 37.3% above the baseline

A note about the businesses in our sample

Given the nature of small businesses as whole, at any time, there is a fair amount of new business formation and closures. The analysis below is our attempt to separate net changes in small-business activity from any pandemic-related market share shifts towards SwipeSimple.

Learn more about the SwipeSimple portfolio and our methodology for this section.

For the data tables on which the charts above were made, view the spreadsheet.

Thanks for reading the CardFlight Small Business Impact Report

Do you have questions, feedback, or press inquiries? Contact us. You may also view past editions of the CardFlight Small Business Impact Report.

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About the report

The CardFlight Small Business Impact Report is intended to provide insights into the impacts of coronavirus/COVID-19 on small businesses across the United States. The report has been featured in and/or cited by The Atlantic, Bloomberg TV, Business Insider, Digital Transactions, PaymentsJournal, PaymentsSource, and others.

Methodology

The report is based on analysis of a representative sample of more than two million transactions processed by more than 60,000 small businesses who use CardFlight’s SwipeSimple software to accept credit and debit card payments.

To create this report, we analyzed a representative sample of millions of transactions processed from March 2 to June 7, 2020, by:

  • 60,000 small businesses 
  • in all 50 states 
  • using CardFlight’s SwipeSimple software to accept credit and debit card payments

This report can be useful in understanding the impact of COVID-19 on small businesses at a hyper-local perspective and across the US. It is updated on a regular basis tracking specific indicators including: shifts in consumer spending among local businesses; impacts across different industries, and across cities and states. 

The SwipeSimple small business owner 

The typical SwipeSimple merchant has one to ten employees and less than five locations or mobile service points. The average active merchant represented in this data set processes approximately $130,000 in credit/debit card payments annually. The merchants are a mix of professional and personal service providers, specialty retail establishments, and food and drink purveyors.

The SwipeSimple portfolio

Given the nature of small businesses as whole, at any time, there is a fair amount of new business formation and closures. The analysis below is our attempt to separate net changes in small-business activity from any pandemic-related market share shifts towards SwipeSimple.

Due to the versatility of our product offering, these shifts occurred by existing small businesses adding SwipeSimple to their payment environment in order to quickly adapt to new service and delivery methods.

To better assess the representative nature of the metrics in our sample, we compared our business activity from March through May 2020 with the same period in 2019, and used the 2019 period as a baseline for the typical contribution towards total small business sales of newly processing merchants. We used this to create an adjusted business formation estimate that attempts to remove bias from any pandemic-related market share gains.

While we will continue to report based upon the SwipeSimple portfolio, we added additional analysis to compare the actual SwipeSimple portfolio with our projection for all small businesses.

The charts above reflect our projection for how small businesses have performed according to the baseline week, based on:

  • SwipeSimple portfolio: Reflects all transactions processed by US small businesses using SwipeSimple for a given week. This is the same methodology for all other charts in this report.
  • Same-store sales: Reflects all transactions processed by US small businesses using SwipeSimple for a given week, only including merchants that were active prior to March 9, 2020.
  • Projection for all small businesses: Reflects actual transactions from merchants in the same-store sales group, plus an imputed amount of transactions from new merchants at the lower 2019 growth levels, to remove the impact of share shift during 2020 due to pandemic-related reasons.