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One in three Aussies struggling mentally with BNPL debt

Close to one in three Australians (31 percent) are experiencing psychological stress that directly relates to Buy Now Pay Later debt, according to Fair Pay, a national survey commissioned by Waave.

With Australians currently suffering under a cost of living crisis, the research examined the extent to which digital payments and online money systems may also be fuelling financial anxiety. The study found that among those feeling the stress of fast credit schemes, Millennials are under greatest strain, with half (46 percent) experiencing psychological stress due to Buy Now Pay Later debt, compared to just 13 percent of Baby Boomers.

The study also showed that consumers are overwhelmed, confused and sceptical when it comes to payments and digital money.

Key findings:

  • Online payment confusion:

    • Almost half (48 percent) of Australians feel online payments cause them to worry more about money (by making it harder to keep track of spending, harder to know when surcharges apply, fear of fraud/scams, etc).
    • Almost half of Australians (42 percent) find online payments cumbersome (i.e. due to needing to enter card details every time, multi-factor authentication, etc.).
  • Trust debt: One in four Australians lack faith in banks to treat them fairly.
  • Data fears: Close to one third of Australians (30 percent) don’t trust financial institutions with their personal data.
  • Checked out on surcharges: Nearly half of Australians (47 percent) are not aware when they are being surcharged or what for at the checkout (online and instore).
  • Bills confusion: Over one in three Aussies (35 percent) find it challenging to understand their bills and the associated fees and charges.
  • The subscription run-away train: One third of Australians (34 percent) find it difficult to keep track of their subscriptions/direct debits and what they are costing them. One in 10 ‘strongly agree’, indicating they find it very difficult to keep track of everything they’re signed up for.

“Through this study we were interested in knowing the extent to which so-called digital convenience may in fact be undermining people’s ability to know where their money goes, how to spend it wisely, how to keep it safe, and if we can trust the parties responsible to help us do that,” said Ben Zyl, CEO and co-founder of Waave.

“The results clearly show that despite a strong consumer appetite for digital convenience, Australians are experiencing additional financial stress and a high degree of confusion due to the plethora of tools, credit schemes, subscriptions and payment forms they are trying to keep track of. They question the intentions of the companies behind these, they’re worried about financial safety, they’re relying on fast credit, and they’re puzzled about how much they’re paying and where that money is going. It’s all a bit of a mess.”

The resurgence of ‘old school’ money

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The research further revealed that when it comes to payments, nearly all Australians (98 percent) stand by cash as the most trusted payment method, with three quarters (75 percent) who trust it ‘completely’. A similar number (96 percent) also trust debit cards as a payment method. Credit cards and digital wallets are a step behind (83 and 81 percent respectively); however, more than one in 10 (13 percent) don’t trust credit cards ‘at all’.

Consumers are most sceptical about Buy Now Pay Later; just over half of Aussies (57 percent) trust Buy Now Pay Later payments, and close to one third (30 percent) don’t trust it ‘at all’.

“In uncertain times, people want to see ‘real money’. The recent TikTok cash stuffing trend among Gen Z is a good example. We’re seeing a revolt against the vested interests of banks, creditors and even technology companies in search of simpler times,” Ben Zyl said.

Gen Z getting burned

Surprisingly, despite their native digital pedigree, Gen Z is the generation at highest risk of being burned by online payments. Although three quarters (73 percent) feel they have the digital tools they need to manage their money well and 95 percent trust digital wallets, over half (52 percent) of Gen Z feel that online payments cause them to worry more about money (by making it harder to keep track of spending, harder to know when surcharges apply, fear of fraud/scams, etc) – higher than both Gen X (49%) and Baby Boomers (38%). They are also most in the dark on surcharges, with over half (54 percent) having no idea when they are being surcharged or what for, compared to 34 percent of Baby Boomers.

Additionally, younger Aussies are more than twice as likely as Baby Boomers to have trouble understanding their bills and the associated fees and charges (Gen Z: 42 percent, Boomers: 18 percent), while almost half (45 percent) of Gen Z can’t keep track of their subscriptions and direct debits and how much these are costing them.

“Gen Z are less confident than other generations when it comes to knowing where their money is going, and it’s stressing them out. They are jumping in head first on the technology but aren’t necessarily reading the fine print and have no way to track everything. That could lead to a spiral of payments and fees,” Ben Zyl added.

Paying it fair

When it comes to digital tools that could alleviate the stress, Australians are most interested in being told what they’re paying for.

  • Four in five Australians (80 percent) said they would use a tool that allows them to view all their subscriptions in one place and see what they are each costing them each week/month, while nine in 10 Australians (87 percent) want to be told explicitly what fees and/or surcharges they are paying at the checkout (online and instore).

  • Local is also important, with seven in 10 Aussies (71%) open to using an Australian-owned digital payment method/digital wallet.
  • So, too, is transparency – over three in five (63 percent) are open to using a function at the online check out that allows them to see their bank balance on the screen before they make a purchase from that account.

“As payment and technology providers, we have to bridge the trust debt. These findings speak to a need for greater transparency, fairness, and simplicity in the digital money economy,” Ben Zyl said.

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