Millennials look for new alternatives to direct debit

- By Collaborative Media & Publishing
Dylan thought he was doing the sensible thing when he set up a direct debit to pay his household bills.

Then he received a larger-than-normal power bill at the beginning of his fortnightly pay cycle.

"The money came out without me realising and before I knew it, I couldn't pay rent," the 26-year-old Western Australian says.

A steep hike in electricity prices hit his share house, which then struggled to pay a power bill of more than $2000.

"It was incredibly frustrating. I ended up having to deal with a payday lender, which put me back further," Dylan said.

Unfortunately, his story isn't unique.

Close to three-quarters (73%) of 25–34-year-olds consider direct debit payments frustrating or difficult to manage, according to new RFi research.

The report comes as BPAY launches an awareness campaign, 'Debit Day', designed to educate people on the dangers of automating important bills and payments.

"We want to help them get control back of their finances, and understanding what they are paying for is key," says Keith Brown, BPAY Group General Manager Product, Scheme and Business Development.

The RFi survey of 2,034 consumers in March found almost one-third (29%) of Millennials are concerned about not having enough money in their account when direct debits are processed, and money is taken out of their account.

The survey also found that one-quarter of Millennials are also worried about updating an expiring bank card before the next round of direct debits. A similar proportion were also concerned about whether businesses could be trusted to keep their bank details safe.

"The research shows that Millennials are the most frustrated age group when it comes to managing their direct debit, but it doesn't have to be this way," says Brown.

Meanwhile, about 20% of Millennials – like Dylan – aren't sure how much they'll be charged for each bill.

Millennials want greater control over their finances

Despite their potential to land users in financial difficulties, direct debit payments have risen in popularity over the past decade.

An RBA survey found that around half of all household bill payments in 2019 were made automatically, more than double the share in 2013[1]. The survey also showed around one-fifth of all payments were direct debited (measured by the value of weekly spending), reflecting a shift towards seamless, digital payments.

However, widespread job losses among casual employees and young people due to the COVID-19 pandemic last year made it difficult for many young people to pay their bills.

The more recent RFi data found that half of Millennials would prefer to use BPAY, which offers greater control, instead of relying on direct debit.

Brown says BPAY is still the preferred way to pay bills and is currently being used by over 60% of all Australians over 18.

"When you use BPAY, you are in control. You can choose when to pay and how much to pay. Unlike direct debit, you can easily change a scheduled bill payment at any time, and it's easy to use BPAY to schedule your bill payments," Brown says.

New innovative apps are also now offering Australians new choices that combine flexibility with control.

After his direct debit bill shock, Dylan shifted his household bill payments to Groupee – an app that encourages split billing among friends – and uses BPAY to maintain control over his finances.

Groupee is just one of more than 60 organisations that have connected with the BPAY service through its APIs. Others include 'Bill Now, Pay Later' budgeting platform, Deferit, and reward-focused bill payment platform Sniip, that offer BPAY as a primary choice for consumers to pay bills.

Watch the Debit Day campaign advertisement here.
 
[1] Consumer Payment Behaviour in Australia | Bulletin – March Quarter 2020. (2020). Reserve Bank of Australia. Retrieved from https://www.rba.gov.au/publications/bulletin/2020/mar/consumer-payment-behaviour-in-australia.html

Published by BPAY Pty Ltd (ABN 69 079 137 518) email: marketing@bpay.com.au. The BPAY Scheme is managed by BPAY Pty Limited.  When you use BPAY payment products, the BPAY Scheme is paid fees relating to processing costs and BPAY Scheme membership.  Contact your financial institution to see if it offers BPAY payment products and to get the Product Disclosure Statement.  Any financial product advice provided by BPAY Pty Limited in relation to BPAY payment products is general advice only and has been prepared without taking into account your objectives, financial situation or needs.  Before acting on such advice, you should review the Product Disclosure.

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