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Can Fintechs Help Solve the Surging Household Payment Crisis?

In the run-up to the festive season, new research from Which? has accentuated the critical need for innovative payment solutions with an increasing number of households missing essential payments.

Which?’s latest Consumer Insight Tracker found that one in 10 households (9.8 per cent) said they had missed or defaulted on a loan, credit card, housing or household bill payment in the month to 10 November. This equates to 2.8 million households and is the highest level recorded since April 2020.

Almost one in 10 (8.8 per cent) renters saying they missed a payment, 5.6 per cent missed a household bill – such as water or energy bill, 5.3 per cent missed a loan or credit card payment, while 2.9 per cent of mortgage holders missed a mortgage payment.

Fifty-seven per cent said they had made at least one adjustment – such as cutting back on essentials, dipping into savings, selling possessions or borrowing – to cover essential spending in the month to 10 November.

“Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do everything possible to help customers get a good deal and avoid unnecessary or unfair costs and charges this winter,” said Rocio Concha, Which? director of policy and advocacy.

“It’s hugely worrying that one in 10 households missed essential payments in a single month. With Christmas and colder weather fast approaching, these pressures on household finances are only likely to worsen in the months to come.”

Dwindling confidence

Consumer apprehension regarding rising prices remains pronounced, with almost 85 per cent expressing concerns over escalating energy costs. Additionally, 83 per cent are experiencing anxiety regarding the soaring prices of food, while approximately 79 per cent are troubled by the surging fuel prices.

Furthermore, consumer confidence in their present household financial situations and their outlook for the UK economy has dwindled for the second consecutive month. Over 53 per cent of respondents anticipate a deterioration in the UK economy over the next year, contrasting with the 16 per cent who hold optimistic views of improvement. This results in a net confidence score for the future economy plummeting to -37, representing a significant 10-point decline compared to two months ago.

Likewise, consumers’ assessments of their personal household finances have taken a dip this month, dropping from a previous score of +21 to +14. These figures underscore a consistent downward trend in consumer confidence since the onset of the cost of living crisis.

As the holiday season draws near, these figures paint a bleak financial landscape. Which? is issuing a call to action for essential businesses, including energy firms, telecom providers and supermarkets, to enhance their efforts in supporting customers and ensuring they deliver value for money.

Tailored interactions

According to Theresa McEndree, chief marketing officer at recurring billing platform Recurly, online retailers are shifting towards more personalised experiences using data-driven subscription models.

She said: “The emphasis will be on brands delving deeper into customer insights to create tailored interactions. This involves integrating AI recommendations and fostering community engagement to enhance the overall experience.

“Ethical practices and a commitment to sustainability will be paramount, as they play a crucial role in building trust and authenticity. The goal is not just to meet customer needs but to proactively anticipate them, cultivating long-lasting relationships that go beyond routine transactions.”

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