Consumer spending was resilient in the first quarter of 2026, even as inflation reaccelerated, gasoline prices surged and consumer sentiment fell sharply amid global instability. The spring edition of the Primax Seasonal Spending Report provides banks with a comprehensive look at Q1 transaction trends and sector performance, along with an in-depth analysis of the ongoing transition to digital and contactless payments.
Debit and credit activity continued to grow when compared year over year, driven by higher tax refunds and sustained spending on everyday needs. At the same time, the rapid shift toward digital payments and wallets continued to gain momentum, highlighting how quickly consumers are adjusting their payment behaviors in real time.
According to the March Consumer Confidence Index, consumer confidence inched higher, up 0.8 points to 91.8. The overall score has declined since 2021, while there was modest improvement in three of the five components on the index. The preliminary April 2026 University of Michigan Index of Consumer Sentiment results dropped 11% from March, posting a 5.7-point loss to 47.6. All demographics (age, income and political party) posted declines in sentiment. According to open-ended survey comments, many consumers blame the war in Iran for unfavorable economic conditions.
Key Takeaways
Key takeaways from the special report include:
- Increases in tax refunds helped offset the impact of surging fuel prices, as year-over-year growth in transactions and purchases through March remained strong for both debit and credit. Debit purchases increased by 6.3%, with the Money Services and Goods sectors accounting for over two-thirds of that growth. Credit purchases were up 4.1%, with the Goods and the Service sectors accounting for 59% of the entire increase. Through March, debit transactions were up 3.9%, and credit transactions rose by 3.4%.
- The Consumer Price Index surged 0.9% in March, taking the 12-month inflation rate to 3.3% and marking the largest increase in two years. Gasoline was the primary driver, accounting for roughly 75% of the increase. This was the first inflationary update since the war with Iran began.
- Increased gasoline prices accounted for roughly 15% of the growth in debit and credit purchases for March. The average per-gallon price of gasoline is up 30%, or $1.18, since the war started in February and is up 27%, or $0.88, year over year. Our data shows increased gasoline consumption in the weeks since the war began.
- Digital wallets continued to gain momentum. In March 2026, digital wallets accounted for 10.7% of all debit transactions, up from 7.9% a year earlier, and 7.1% of all credit transactions, up from 5.4% a year earlier.
Deep Dive: Digital Payments
This edition explored the primary ways credit and debit cards are used, including the Primax view of “digital payments,” which represent the alternative ways cards can be used without a physical card required to facilitate the transaction, including card-not-present (CNP) activity, tokenized transactions and card-present (CP) tokenized activity associated with digital wallets, namely the “Pays” (Apple Pay, Google Pay, etc.).
For the first quarter of 2026, digital transactions accounted for 47% of all credit card transactions and 44% of all debit card transactions. Digital purchases represented a greater share of overall purchases.
Contactless transactions continue to increase. The increased number of contactless cards in the market, consumer comfort and acceptance of “tapping” transactions, as well as the increased merchant adoption of terminals that accept contactless transactions have contributed to this growth. For the first quarter of 2026, credit contactless transactions represented 28% of all credit transactions, up from 24% in 2025. Debit contactless transactions represented 22% of all debit transactions, up from 16% in 2025.
For digital card activity, the percentage of overall transactions that are non-tokenized is declining for both credit and debit cards, in favor of tokenized cards on file and digital wallets. In the first quarter of 2026, non-tokenized transactions accounted for 20% of all credit transactions, down from 22% in 2025. Non-tokenized debit represented 19% of overall debit card transactions, down from 21% in 2025.
What Should Banks Do Now?
In this uncertain economic environment, banks should closely monitor how rising prices — especially fuel and essentials — are reshaping payment behavior. At the same time, financial institutions should accelerate investments in digital and tokenized payment experiences. Strengthening analytics capabilities to track sector‑level shifts, supporting digital wallet adoption and optimizing debit strategies can also help banks stay aligned with evolving consumer preferences.
Looking Ahead
Interest rates were left unchanged after the Federal Open Market Committee (FOMC) meetings on March 18 and April 29 with no changes to the Prime rate. The next meeting is scheduled for June 16. With erratic job growth and the economic impacts of the war with Iran, the Federal Reserve will need to balance the swift inflationary growth from energy prices and job growth.
We hope that our financial institutions can make informed and strategic decisions to best serve their customers by leveraging insights from this and future editions of Primax spending reports.
