Credit Card and Consumer Spending Data
Aggregated card and receipt data track consumer spending in near real time. Learn how it is collected, how investors forecast sales with it and its limits.
Transaction data, mainly aggregated and anonymised credit and debit card purchases, is one of the most widely used types of alternative data. It shows how much consumers are spending at specific companies, often daily, long before companies report quarterly results. Investors use it to forecast revenue for retailers, restaurants, travel companies and online platforms, and to track consumer spending trends in the wider economy. Its power depends on how representative the data is and how carefully it is adjusted.
How the data is collected#
| Source | Description |
|---|---|
| Card networks and processors | Aggregated spending by merchant and category |
| Banks | Anonymised customer transaction data |
| Personal finance apps | Users who link bank accounts and consent to data use |
| Email receipt panels | Purchase confirmations from consenting users' inboxes |
| Point of sale systems | Data from merchant payment terminals |
Data is aggregated and anonymised before being sold. Vendors map merchant descriptions to company tickers, which is harder than it sounds: one company may appear under many names.
How investors use it#
- Build a panel: track spending at each company over time.
- Adjust for panel changes: new or departing users would otherwise distort trends.
- Compare with reported revenue historically to estimate the relationship.
- Forecast the current quarter and compare with consensus.
Macro uses#
Card data also tracks overall consumer spending. During the 2020 pandemic, researchers including the Opportunity Insights team at Harvard used card data to track spending changes almost daily, well before official retail sales and GDP data were published. See Retail Sales.
Biases and limits#
| Issue | Effect |
|---|---|
| Panel bias | Panels may over represent certain incomes, regions or ages |
| Payment mix | Cash, gift cards and some digital wallets may be missed |
| Channel coverage | Online, in store and international sales may be covered unevenly |
| Merchant mapping errors | Misattributed transactions |
| Returns and refunds | May not be captured accurately |
| Changes in the panel | A large bank joining or leaving can create false trends |
| Crowding | Many funds use similar data, so its signals are quickly priced in |
Privacy and regulation#
Transaction data must be properly anonymised and comply with privacy laws. Regulators and the public have questioned how financial data is collected and shared. Vendors and buyers typically conduct legal reviews, and some data sources have been withdrawn after privacy concerns. See Alternative Data Explained.
Who benefits most#
Card data is most useful for:
- Consumer facing companies where card payments dominate sales.
- Companies with many small transactions, such as restaurants and subscription services.
- Domestic businesses whose sales are well covered by the panel.
It is less useful for business to business companies, companies with large international sales and those with lumpy contract revenue.
Frequently asked questions#
What is credit card data in investing?#
Aggregated, anonymised data on consumer card transactions used to estimate company sales and track spending trends.
How accurate is card data for predicting earnings?#
It can be quite accurate for consumer companies with good coverage, but biases in the panel and missing channels can cause large errors.
Is credit card data legal to use?#
Yes, when it is properly anonymised, legally obtained and compliant with privacy laws and data licensing terms.
Next, learn about online activity data in Web Traffic, App Downloads and Search Trends.
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