From excessive spending to debt delinquency: Should we blame mobile payments?

Abstract

This study investigates whether the use of mobile payments makes consumers more vulnerable to debt delinquency and explores whether this relationship works through excessive spending. Based on a large nationally representative sample of the U.S. population, the results show that mobile payment users are more likely to be delinquent than non-users. By examining the three main sources of indebtedness (mortgages, student loans, and credit card debt) in the U.S., this study concludes that the use of mobile payments not only leads to delinquency in credit card debt but spills over into delinquency in mortgages and student loans. Further evidence reveals the underlying transmission mechanism by demonstrating that mobile payment usage is related to debt delinquency both directly and indirectly through provoking excessive spending. The findings suggest that while enjoying the benefits of mobile payments, consumers should be wary of the severe adverse consequences of using them. Implications for consumers, financial service providers, financial educators, and financial planners are provided.