INSIGHTS ¦ European Payment Report 2023


Summary

The European Consumer Payment Report 2023 highlights the economic challenges facing consumers amid rising inflation, interest rates, and the cost-of-living crisis. With financial pressures mounting, spending behaviors and attitudes towards debt and payments are shifting, prompting concerns for both consumers and businesses.

UK Summary

Key Points

  1. The UK is experiencing a significant cost-of-living crisis, severely impacting household finances.
  2. Inflation and rising interest rates have led to reduced spending power for a majority of UK consumers compared to the European average.
  3. A substantial portion of consumers are making late payments, with increasing trends among Gen X and Millennials.
  4. High inflation rates are outpacing employee remuneration packages, forcing consumers to cut expenses and use savings for day-to-day costs.
  5. The average over-spender in the UK exceeds their budget by £191, equating to 17% of the average monthly household income.
  6. A growing number of consumers are borrowing money to manage daily expenses and bills.
  7. The digital economy, particularly subscription services and buy-now/pay-later schemes, is complicating budget management, especially for younger consumers.
  8. An increasing acceptance of skipping bill payments is observed, reflecting a shift in social norms and attitudes toward debt.
  9. The concept of “greedflation” is introduced, describing businesses exploiting inflation to increase profit margins, which is negatively perceived by consumers.
  10. Financial literacy is identified as a crucial factor for managing economic pressures, with a direct correlation to payment behavior and financial well-being.
  11. Businesses are advised to adopt empathetic and flexible approaches to customer payments and avoid practices like greedflation to maintain trust and loyalty.
  12. The report predicts a continued rise in payment defaults and emphasizes the importance of ethical debt management practices.
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Key Statistics

  • 62% of UK consumers report having less spending money than a year ago.
  • 33% have failed to pay at least one bill on time in the past year.
  • The average over-spender exceeds their budget by £191, or 17% of their monthly income.
  • 25% have borrowed money to pay bills in the past six months.
  • 24% have no savings at all, with a significant increase in those with less than one month’s savings.
  • 37% feel less guilt about skipping bill payments than in previous years.

Key Take Aways

  • The economic downturn is severely impacting UK consumers, leading to reduced spending power and increased financial strain.
  • High inflation and rising interest rates are key contributors to the cost-of-living crisis.
  • Late payments and debt accumulation are becoming more common, with younger generations particularly affected.
  • Consumers are cutting expenses and relying on savings to manage daily costs, indicating a precarious financial situation.
  • The rise of the digital economy, including subscription and buy-now/pay-later services, is challenging consumers’ ability to manage budgets.
  • A shift in social norms regarding debt and payments suggests a growing acceptance of skipping bill payments.
  • “Greedflation” is a significant concern among consumers, who are critical of businesses that exploit economic conditions for profit.
  • Financial literacy is crucial for navigating the current economic uncertainty and managing household finances effectively.
  • Businesses should adopt flexible and empathetic approaches to payment and avoid exploitative pricing practices to maintain customer loyalty.
  • The importance of ethical debt management practices is emphasized in the face of rising defaults and financial challenges for consumers.
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European Summary

Key Points

  1. The cost-of-living crisis and economic downturn have significantly impacted European household finances.
  2. Inflation and rising interest rates have led to decreased consumer spending power.
  3. There’s an increasing trend of consumers borrowing to cover daily expenses.
  4. Late bill payments are becoming more common, with a notable shift in consumer attitudes towards debt.
  5. Financial literacy is crucial for consumers to navigate the current economic challenges effectively.
  6. Businesses can play a role by adopting ethical practices and supporting consumers through flexible payment options.
  7. Digital economy challenges, including subscription services and buy-now/pay-later schemes, are complicating budget management.
  8. The report suggests a correlation between financial literacy and better financial management and resilience.
  9. Consumer trust in businesses is influenced by perceived ethical practices, particularly regarding price adjustments during economic downturns.
  10. The concept of “greedflation” is introduced, highlighting consumer backlash against businesses exploiting inflation for profit.
  11. There’s a growing acceptance among consumers of skipping bill payments, reflecting changing social norms.
  12. Ethical debt management and improved financial literacy are emphasized as key to addressing the financial challenges faced by consumers.

Key Statistics

  • 49% of European consumers report having less spending money than a year ago.
  • 35% of consumers have skipped at least one bill payment in the past 12 months.
  • 38% of consumers with good financial literacy think they might have to skip a bill payment over the next year, compared to 45% with poor financial literacy.
  • 68% of consumers would stop spending money with a business they perceive as practicing “greedflation.”
  • 47% of consumers prefer shopping with businesses that offer flexible payment terms.
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Key Take Aways

  • The economic downturn is deeply affecting European consumers, leading to reduced spending power and increased reliance on borrowing.
  • Rising interest rates and inflation are major contributors to financial strain.
  • Changing attitudes towards debt and payment behaviors indicate a shift in social norms.
  • Financial literacy is key to managing economic challenges and ensuring financial well-being.
  • Ethical business practices, including transparent pricing and flexible payment options, can foster consumer trust and loyalty.
  • Addressing “greedflation” and supporting consumer financial literacy are crucial steps for businesses to mitigate the impact of economic downturns.

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