Consumer comfort levels lower for BNPL and crypto

  • By Zilla Efrat

Australian consumers are embracing digital finance methods and recognise the potential for biometrics to offer security and convenience when making payments, but their comfort levels remain low when it comes to paying buy now pay later (BNPL) and crypto.

These are some of the findings of Mastercard’s 2022 New Payments Index (NPI) report, which analyses consumers’ evolving attitudes and behaviours around emerging payment methods in 40 markets, including Australia.

The NPI reveals that Australian consumers are embracing new payment methods.

More than 80 per cent of those surveyed used technologies like digital wallets, QR codes, BNPL, cryptocurrencies and biometrics in the last year. And their use is growing – over 51 per cent upped their usage of at least one digital payment method over the year.

“While the pandemic accelerated the adoption of new payment technologies, Mastercard’s research shows that Australians have consistently demonstrated a willingness to embrace innovative, digital payment options,” says Richard Wormald, division president Australasia at Mastercard.

The NPI suggests the increased usage of new technologies has been lasting, with 44 per cent of Australian respondents cutting back on their use of cash payments over the past year.

The survey also reveals that more than half of consumers (58 per cent) believe that using biometric technologies for identity is more secure than a PIN, password, or another form of identification.

Indeed, 63 per cent said biometric identification is easier than remembering PINs or passwords with their top use cases being fingerprint (49 per cent) and facial recognition (45 per cent).

But only 42 per cent felt comfortable sharing their biometric data to save time and 74 per cent worried about which entities would have access to this data. Despite this, 34 per cent of Australian consumers used biometrics for at least one task in the last year, demonstrating an enthusiasm for the convenience of the technology and untapped potential if providers can properly address their misgivings about privacy.

According to the NPI, Australia is ahead of the curve when it comes to BNPL usage. A third of consumers used it in the past year compared to only 21 per cent of consumers.

Australian consumers are drawn to BNPL for low/no interest payments in times of emergency and to expedite bigger purchases. Looking ahead, 45 per cent say they are likely to use BNPL in the next year.

At the same time, building trust and comfort is key as Australian consumers feel safer using BNPL solutions backed by a major payment network (60 per cent) or their existing bank (56 per cent), rather than from other providers.

The NPI found that consumers in Australia have heard of cryptocurrencies (92 per cent), non-fungible tokens (62 per cent) and other digital assets, but uptake has been gradual.

It reveals that 51 per cent of those polled agree they would use cryptocurrency more if they understood it better and 26 per cent of consumers have done at least one crypto-related activity in the past year.

But for now, the focus is on investment, says Mastercard.

Among Australian consumers, 21 per cent (and 34 per cent of Australian millennials) report holding crypto as an investment during the past year. Popular future use cases include using crypto to redeem rewards, invest and make everyday payments.

Currently, 17 per cent of Aussies are comfortable using cryptocurrency to pay, and 21 per cent say they are likely to use it in the next year.

Respondents said more involvement from governments and dependable institutions like banks (cited as the most trusted provider of digital currencies) would boost their confidence in crypto. Diving deeper, 62 per cent agreed that governments should regulate the cryptocurrency and stablecoin industry.

“The survey findings also reinforced the need for businesses to provide choice to meet consumer needs and expectations, both online and offline,” concludes Wormald.