Tap and go driving risky habits
Cash is out and tap-and-go options are the top payment method for 77 per cent of consumers, but this trend is disconnecting consumers from the value of money and driving risky spending habits, especially for those facing financial difficulties.
That’s the finding of new research commissioned by the Customer Owned Banking Association to coincide with its introduction of a new industry Code of Practice that aims to increase protections for customers experiencing vulnerability or disadvantage.
The study found that those who were financially struggling or in serious difficulty were more likely than those who were financially comfortable or secure to overspend (44 per cent vs. 35 per cent).
They also appear to find it harder to keep track of spending (39 per cent vs. 33 per cent) or hesitate to use tap-and-go options (35 per cent vs. 26 per cent).
More young people aged 18-34 compared to older people aged over 55 agreed that tap-and-go options make it easier to overspend (46 per cent to 27 per cent), harder to track spending (42 per cent to 26 per cent) and hesitate to use tap-and-go options (42 per cent to 17 per cent) compared to older people aged over 55.
The data shows that buy now pay later (BNPL) services were being used frequently by those already struggling with their finances, with 29 per cent of those financially struggling or in serious difficulty using BNPL services at least once a month.
BNPL services were also used significantly by younger spenders, with 19 per cent of younger people using BNPL at least once a week compared to two per cent of older people.
Michael Lawrence, CEO of COBA, says the customer-owned banking industry’s new Code of Practice, coming into effect on 31 October 2022, will provide additional protections for those experiencing vulnerability, including those who are struggling financially.
"As behaviours change through technology use, it is important that we, as customer-owned banks, remain across what these behavioural changes mean for customers’ financial health," he says.
"Technologies such as digital payments services offer many benefits for customers, including a frictionless and convenient experience. However, as with any new technology, understanding the impacts on consumer behaviour is essential to ensure consumers who are most vulnerable are supported.”
The new industry code provides significantly expanded protections for vulnerable customers. It has commitments to take reasonable steps to make banking services accessible for individual customers in the areas in which its members operate, including older customers and First Nations Peoples.
Another commitment is to adapt customer service standards where reasonably practicable and take extra care for customers experiencing vulnerable circumstances, including in circumstances involving disability, elder abuse, or domestic violence.