WASHINGTON—A study of mobile-payment using Millennials (ages 18-34) in the U.S. found they were less likely to be financially literate than others of the same age who didn't pay for things with their phones.
They were also more likely to make other bad financial decisions, such as overdrawing checking accounts, racking up credit card fees, borrowing from payday lenders, or dipping into their retirement accounts early, according to the study by Global Financial Literacy Excellence Center at the George Washington School of Business.
Paradoxically, this is the case even though mobile-payment users tend to have more assets, make more money, and be better educated, stated Quartz in its analysis.
Research also found that one-quarter of people who use their phones to track spending reported overdrawing their accounts, compared with 20% of those who didn’t use their phones for this.
“What gives? One possibility is that electronic payments make spending too easy and budgeting more difficult. It lacks the tactile, heart-sinking experience (for some) of seeing a $50 bill return as smaller notes after a purchase,” said Quartz.
“In the data we do not have information about what explains that behavior, but making payments easy and mindless may induce people to spend more,” said Annamaria Lusardi, a professor at George Washington School of Business.