“He who is quick to borrow, is slow to pay”
– German proverb
If you are young you are likely in too much of a hurry to read this and if you are older – can you remember what it was like to be young? Fast times and cashless highs: Technology’s ode to debt makes for thrilling reading. The young are in love with technology and this is a cashless highway to debt for the unwary. I picture a raceway, like Daytona, and lots of youthful racing car drivers revving their engines in anticipation of going around the bend. Young men and women risking life and limb to achieve victory over the slow lane. If you survey the top items on Santa’s gift list this year they will likely be the latest smart phone or high tech devices, as they have been for the last decade or more. Humanity is in rapture with the fruits of technology, as we have always been.
The Market’s Cut & Thrust Goes High Tech
If you look back through history you will see remnants of swords and tools in museums, which were the technological offspring of metallurgy. The evolution from bronze to iron gives rise to the names of the various ages cataloguing historical eras. Of course, swords turned into guns and we all know where that has led us. The printing press, the Gutenberg press revolutionised the world in the fifteenth century and beyond. Books and pamphlets were no longer the exclusive domain of the elites. Ideas and change manifestoes were able to reach a much wider audience affecting shifts in world orders. Now, we have social media and fake news. Currently, we are in the grip of the communication and information zeitgeists and almost every homo sapiens carries a portable device capable of these things. Touch a screen and ‘hey presto’ instant gratification.
“Australians have made big moves away from cash over the past decade, with the Reserve Bank of Australia’s 2016 consumer payments survey showing only 37 per cent of consumer payments are made in cash today compared to 69 per cent a decade ago.”
– (Mitzen, 2018)
“According to PwC research, almost half the world’s digital payments in 2017 were made in China, where apps such as Alipay and WeChat Pay let consumers pay for nearly everything with their smartphones. The adoption of QR codes and explosion of e-commerce has led to a decline in the use of cash, particularly in urban China.”
– (Hutt, 2019)
The Cashless Swipe Into A Debt Trap
“Creditors have better memories than debtors.”
– Benjamin Franklin
Economists will tell you that it is the exchange of produce and money that has enabled the growth of civilisations across the ages. Buying and selling stuff is at the heart of our global domination, according to them. Technology has been in the service of the market since the beginning of time. It is the market which has financed the research and development of technologies across the globe. The young are always the first to embrace new technologies, as they seek harbingers of their own hegemony. Our youthful citizens bear no attachment to a past they did not share. Progress will race across the surface of the earth fleet footed in search of market expediency. It is cool to carry no cash and swipe your phone’s screen, when conducting a transaction, in the twenty first century. The psychology of pixels forming numbers on a screen is very different to the sound and feel of hard currency in your pocket, however. Easy come, easy go, or is it a sense of it never being real in the first place and perhaps, never really having been in your possession? Anyway, things are moving along so rapidly there is no time to waste on philosophical reflection. Fast times and cashless highs: Technology’s ode to debt mounts up like investors in Silicon Valley.
Humanity and the market are always in a hurry. There are victims, however, of the ever-faster economy driven by technological innovation like cashless payment. Collateral damage, perhaps, as these young lives are corralled by debt cruelling their opportunities for a fulfilling future. Buying a home slips further out of reach of ordinary young Australians each day, it seems.
Mobile Payment Apps
The advent of mobile payment apps on phones has seen a huge uptake of this technology by Gen Zeders. PayPal, Afterpay, Apple Pay, Google Pay, ZipPay, Samsung Pay, Fitbit Pay, Garmin Pay, and the big 4 banks have their own cashless swiping app to pay with here in Australia. According to Statista in 2022:
– Apple Pay has 50% of the market
– Afterpay 37%
– PayPal 31%
– Google Pay 25%
– CommBank Tap & Pay 20%
– ZipPay 18%
– ANZ Tap & Pay 11%
– NAB Pay 10%
– Alipay 9%
– Samsung Pay 8%
– Fitbit Pay 5%
https://www.statista.com/forecasts/1187954/mobile-payments-by-brand-in-australia
“In Australia, we have had an extremely fast adoption of online technologies,” Ms McGovern said. However, the overwhelming feeling from parents is that as money becomes less tangible, there is a need to help children understand the value of money and spend responsibly.”
– (Jolly, 2019)
“And some have discovered this can lead to serious problems – like a father whose 18-year-old daughter racked up S$20,000 (US$14,865) on his credit card because she went on an in-game buying spree. Like many children of this generation, my daughter already has an understanding of e-commerce, but fails to grasp the value of money involved.”
– (Tan, 2022)
Generation Z: The Digital Cohort
“These are the people born between 1995 and 2010. This is the generation which is the newest generation to enter the workforce. They are the most technologically adept generation and are highly connected to the social media web.”
– (Mahapatra, 2022)
Studies into Generation Z, the first truly digital generation, tell us that they do more research via the internet than previous age groups of consumers. Whether they are capable of differentiating spin from fact is another question all together, however.
Buy Now Pay Later Blues
https://moneysmart.gov.au/other-ways-to-borrow/buy-now-pay-later-services
Afterpay promises “Shop Now. Enjoy Now. Pay Later.” It is the ultimate instant gratification for those who just cant wait until they can afford it. There are around 7 million Aussie users of this largely unregulated lending service and most of them are young. Zip, Brighte, Humm, Klarna, LatitudePay, Openpay, and Payright are other brand names of this form of lending operating downunder. The Albanese federal government, however, has flagged the introduction of some protective legislative measures. Financial Service Minister Stephen Jones stated:
“A lot of Australians are racking up unaffordable debts,” Mr Jones said.
“And what we know is lots of people have lots and lots and lots of buy now pay later accounts.
He said most of these accounts were held by people aged 18 to 35.
“It seems to us that it makes sense to have some credit controls in place.”
“Consumer groups including Financial Counselling Australia and the Consumer Action Law Centre have long argued that buy now pay later providers should adhere to the same responsible lending laws as other providers of credit.”
– (Khadem, 2022)
The Financial Wellbeing Report by University of Newcastle & Greater Bank
“Young people experienced the highest levels of financial hardship with 43% of respondents in the 18–24 years age category reporting that they could not meet their personal debt obligations.”
“Younger adults, those aged 18–24 years and 25–34 years, had the lowest level of financial literacy of all age groups.”
“Approximately 25% of respondents took out a payday loan in the last 12 months. On average, these respondents had 6.7 payday loans during that period.”
Buying Stuff Online
Algorithms are designed to track your online purchasing habits and to keep on presenting things you might like to buy via the digital space. The digitalised world greases the wheels to speed up every aspect of the free market economy. There are no checks or balances in the way of unrivalled capitalism. Credit is extended wherever possible to ensure that we all keep consuming to the best of our abilities. Credit bureaus produce consumer credit reports documenting our exploits in the realms of loans and higher purchases.
Privacy Is The Price of Digital Convenience in the Cashless Transaction
“A cashless society is one in which physical cash no longer exists as a means of payment. Instead, tech-enabled online banking services and digital currencies facilitate cashless transactions. Countries such as India, Sweden and China are already moving in this direction by digitising their payment methods.
Australia is also moving in this direction, as the Reserve Bank conducts research into digital currency.
The benefits include convenience, preventing crime and even enhancing hygiene. For instance, cashless payments help to facilitate social distancing throughout the Covid-19 pandemic. However, cashlessness threatens security, surveillance and vulnerable groups.”
– (Higgins, 2021)
SBF Fried The Crypto Currency To The Tune of Billions
The Reserve Bank wont be accelerating any interest in digital currencies any time soon after the collapse of FTX owing billions around the globe. Devastatingly, some 30, 000 Australian investors lost millions. Sam Bankman-Fried (a revealing name as it turns out in hindsight) was a profligate spender of other people’s money. FTX sponsored Superbowl’s and other high profile events, pumped money into the political campaigns of lots of politicians, and lived it up to the tune of hundreds of millions of dollars. SBF is now in jail awaiting prosecution and trial for embezzlement.
“The empire built by Mr. Bankman-Fried, who was once compared to titans of finance like John Pierpont Morgan and Warren Buffett, collapsed last week after a run on deposits left his crypto exchange, FTX, with an $8 billion shortfall, forcing the firm to file for bankruptcy. The damage has rippled across the industry, destabilizing other crypto companies and sowing widespread distrust of the technology.”
– (Yaffe-Bellany, 2022)
“Bitcoin actually has the balance and incentives right, and that is why it is starting to take off.”
– Julian Assange
Australian Stock Exchange Blows $170 Million on Blockchain Technology Failure
“The Australian Securities Exchange (ASX) is set to axe almost 200 contractors who were working on incorporating blockchain technology into its CHESS clearing and settlement system.
The news comes after ASX announced the demise of its seven-year-long project earlier this month, with the company writing down a $170 million pre-tax loss as a result.”
– (McCurdy, 2022)
Serious Privacy Data Issues Across The Financial Sector in Australia
Corporations and governments feed on consumer data like rats and mice in a grain silo. Generation Z and, indeed, all of us have had our privacy swapped for the shiny beads of cashless payment technologies. Everything you do in the economic sphere can be tracked and is recorded for better or worse. Santa knows when you have been good or bad. His corporate accounting department can track your transactions like the NSA or any half decent security service in the twenty first century. Fast times and cashless highs: Technology’s ode to debt is well documented in the digital tradition. Many of us would say, ‘hang on, its not all doom and gloom, this is merely the cost of a more efficient economy.’ In some ways, it is like riding a wave, fun until it dumps you.
Data Breaches A Disease Born From The Loss Of Privacy
Data breaches via hacking are but one dark side of that dumping. Optus and Medibank are the most recent high profile data breaches affecting millions of Australians. The Australian Tax Office (ATO) is under fire from backdoor bedevilment via fake myGov accounts directing tax return payments to bank accounts that scammers have set up to scoop up their ill gotten gains. Identity theft is plaguing our financial institutions like an infectious pandemic ripping through the defences left, right and centre. Our money and assets are not safe from clever criminals operating out of reach of our police and security forces. The holes in the digital systems are legion, it seems, and not for easy plugging any time soon.
Cash left little trace for anyone to follow, which is why governments were keen to replace it with digitally recorded transactions. Paying with cash, however, guarded your privacy from those devious cyber criminals and their hacking skills. The criminals have switched horses, it seems, leaving cash alone apart from their money laundering of drug revenue in our casinos, and jumping on the cyber bandwagon to ride ‘identity theft’ home as the new winner in the race. Human ingenuity remarkably overcomes whatever technological barrier you put in its path. Digital and white collar crime does pay – it seems.
“Phishing is a major problem, because there really is no patch for human stupidity.”
– Mike Danseglio
What To Do About Debt & Bad Credit Ratings
You rode that wave into the shore but incurred a few bad debts along the way. Now, you are saddled with a reputation for not paying your debts off on time. What can you do about it? Beware of businesses offering fast credit repair and easy solutions for bad credit scores. There are none and these companies are usually the same bunch of sharks that ate your lunch the first time around. The fast times and cashless highs are over gimoozaabi. Now begins the long slow trek back from the borderlands of Lone Ranger and Tonto territory. Getting out of debt and re-establishing your credit worthiness is the business of maturity and more middle aged ambulation.
The Federal Court finds multiple breaches of Australian Consumer Law in relation to credit repair, but not debt management:
The Federal Court has found that J Daniels & Associates (JDA), a debt management firm, engaged in unconscionable conduct and breached consumer guarantees in relation to credit repair services provided to Consumer Action’s client, Ms Brenda Wade, whose home was in the process of being foreclosed.
The court found that the credit repair services, which removed a default from her credit report, provided ‘no practical benefit’. Ms Wade paid $2,000 for JDA to remove a Vodafone default from her credit report, but this did not assist her to refinance or keep her home. The court ordered a refund of this amount plus interest.”
https://consumeraction.org.au/federal-court-finds-multiple-breaches-of-australian-consumer-law-in-relation-to-credit-repair-but-not-debt-management/
You wont be swiping your way back to a good credit rating with the same gay abandon with which you may have incurred all those debts the first time around. Paying stuff off usually involves small steps and lots of them taken slowly over time. Understanding the temporal regime by which the credit laws in Australia operate is of immense use in regaining your credit worthiness going forward. How long negative listings stay on your consumer credit file is important and grasping this knowledge will serve you well. Most of us do not read the fine print on the contracts we sign. Often times, it is only when we come a cropper do we realise the magnitude of our mistakes. Fortunately the free enterprise economy does not want to punish us permanently, unless our crime is of the most serious financial nature.
Don’t Leave Your Creditors In The Dark!
7 years is the length of our exile and shunning from credit in the case of a serious credit infringement remaining on our consumer credit file. An example of this is an individual with an outstanding debt having left an address without providing the credit provider a new forwarding address. 5 years for bankruptcy information staying on the credit report. 5 years for court judgements and credit enquiries. 5 years for debt agreements from the date the agreement was made. 5 years for defaults. 2 years for current credit obligations. 2 years for repayment histories. 1 year for financial hardship information. Coming to terms with these timings is pretty important when following the road to redemption for your financial reputation in Australia.
What About Mistakes On Your Credit File?
We do not live in a perfect world and mistakes are made, even on consumer credit files. If you find an error you can request to have it corrected or removed from your credit report by the credit provider concerned. Therefore, you should check your credit files regularly in case of mistakes and incorrect information appearing on your report. There are 3 different credit bureaus who produce their own credit reports. You can request a free copy from each of these agencies every 3 months or within 90 days of being knocked back for credit by a participating lender. In this time of heightened cybercrime and identity theft it is strongly recommended that you examine your credit file frequently. If you discover fraudulent entries and listings on your consumer credit report you should immediately contact your local police and the Australian Cyber Security Centre. https://www.cyber.gov.au/
Credit Bureaus in Australia
Illion Ph. 1300 734 806
Experian Ph. 1300 783 684
Equifax Ph. 138 332
In addition, contact the relevant credit provider and credit bureau. You may wish to consult a credit repair lawyer if you find errors or fraudulent activity listed on your credit file. Indeed, having a credit repair expert look over your file may reveal things not immediately noticeable to you. They say the path of true love rarely runs smooth; and getting mistakes corrected on your consumer credit report can, also, encounter resistance in the form of disputations re-whether mistakes have occurred.
“If you want to complain about the information in your credit report you should contact the relevant credit provider, credit reporting body or other relevant third party. They should generally make a decision about the complaint within 30 days. If they don’t respond to the complaint, or you’re not satisfied with their response, you may complain to the relevant external dispute resolution (EDR) scheme.”
https://www.oaic.gov.au/privacy/credit-reporting/make-a-credit-reporting-complaint
Conclusions In The Cashless Sphere
Kids and youthful Australians are enamoured of the new technologies making buying stuff quick and easy. Swiping your smart phone at the checkout seems a clever and modern thing to do. The ramifications of fast transactions can be a failure to husband one’s resources. Profligate spending may be encouraged by the intangible nature of the technology. Where is the clink of those golden coins and the rustle of that cash? Fast times and cashless highs: Technology’s ode to debt can tell a tale of woe for regretful spenders long after the thrill has gone. You can come back from debt, however, and an abysmal credit score, but it takes discipline and resolution. Check your consumer credit reports regularly for accuracy of information and in light of the proliferation of identity theft and cybercrime. A good credit reporting lawyer can help – No Win No Fee!
“If you think technology can solve your security problems, then you don’t understand the problems and you don’t understand the technology.”
– Bruce Schneier
Digital documentation has created vast amounts of personal data, which is being hacked and exploited via cybercrime because corporations and government departments cannot secure it. Identity theft and fraud is rife across Australia and our assets are not safe in the digital sphere. Governments and the industry are playing catch up but as of right now the cybercriminals are winning. Blockchain technology, which claims to be a superior secure digital ledger is the technology behind cryptocurrencies. Unfortunately, the crypto sector is largely unregulated and the collapse of FTX saw billions of dollars wiped from hundreds of thousands of investors globally. Fast money and cashless technologies are not always the instant panacea they appear to be.
References
Higgins Erina, What Are the Privacy Implications of a Cashless Society? , Lawpath, 29 June 2021, Viewed 20th December 2022.
Hutt Rosamond, These are the pitfalls of a cash-free society, World Economic Forum, 2 May 2019, Viewed 22nd December 2022.
Jolly William, Parents say a ‘cashless society’ will hurt their children financially, Savings.com.au , 2 December 2019, Viewed 21st December 2022.
Khadem Nassim, ‘Inappropriate lending’: Buy now pay later industry could face new regulations to stop financial abuse, ABC News, 21 November 2022, Viewed 22nd December 2022.
Mahapatra, G. P., Bhullar, N., & Gupta, P. (2022). Gen Z: An Emerging Phenomenon. NHRD Network Journal, 15(2), 246–256. https://doi.org/10.1177/26314541221077137
McCurdy will, Australian Stock Exchange Fires 200 Contractors Working On Cancelled Blockchain Project, Decrypt, 2 December 2022, Viewed 22nd December 2022.
Mitzen Ronald, Cashless society a double-edged sword, risks must be considered, Financial Review, 30 April 2018, Viewed 22nd December 2022.
Newcastle Business School, Financial Wellbeing and General Life Satisfaction In Australia, 2022, https://www.newcastle.edu.au/__data/assets/pdf_file/0009/816039/2022-1041-Greater-Bank-report-v241.pdf ,Viewed 23rd December 2022.
Tan Annie, Commentary: Children may develop a careless attitude towards money, as more transactions go cashless, Channel News Asia, 15 January 2022, Viewed 22nd December 2022.
Yaffe-Bellany David, How Sam Bankman-Fried’s Crypto Empire Collapsed, NYT, 14 November 2022, Viewed 22nd December 2022.