Overhaul of crypto and buy now, pay later: What you've missed


Digital due for an overhaul, cops catch money mules, and one in three Aussies have no money worries

Here are five things you might've missed this week.

Digital payments to be reformed

afterpay buy now pay later credit score

Federal Treasurer Josh Frydenberg has flagged an overhaul to the digital payments sector, which includes digital wallets, buy now, pay later (BNPL) and cryptocurrencies.

Described as the most significant reforms to Australia's payment systems in more than 25 years, the federal government will go through a consultation period to mid-2022, with the first reforms set to be implemented by the end of next year.

The announcement follows a mid-week report by Financial Counselling Australia (FCA), which claims BNPL debt is causing significant financial stress.

The CEO of Financial Counselling Australia, Fiona Guthrie says, "Financial counsellors are seeing more clients with buy now pay later debt. 84% of financial counsellors surveyed said that about half, most, or all clients now present with BNPL debt. This compared to just 31% a year ago."

 Money for jam can lead to a sticky end

The Australian Federal Police (AFP) kicked off the week warning that if an offer to make easy money sounds too good to be true, it probably is.

It follows a string of arrests in connection with a global money-laundering sting where a number of Australians have agreed to act as 'money mules' - transferring cash, usually the proceeds of crime, into the country.

AFP Acting Commander Cybercrime, Ben Case, says crooks use a range of tactics to convince people to launder money including romance and job scams.

"This is a warning to everyone," says Case. "If you're promised a paycheque for simply moving money between accounts, converting money to cryptocurrency and moving it to another wallet, or if an online romantic partner is asking you to transfer funds on their behalf, it is more than likely a scam."

It's a scam that could put you behind bars. Victoria Police Detective Superintendent Cybercrime Division Jane Welsh, says, "Money mules, even unsuspecting ones, should understand they are complicit in serious crimes and will be targeted accordingly."

43% of Australians 'doing ok' financially

Close to one in three Australians say they have no financial worries. That's according to the latest ANZ Financial Wellbeing report. It also found two out of five (43%) adults feel they are 'doing okay' financially, but at the other end of the scale, 17% of us are 'getting by', and 11% admit they are struggling.

Among the 'no worries' respondents, close to half earn over $100,000 annually, and the majority (65%) are aged 50-plus.

The 'doing OK' group may earn less but they typically take sensible steps with their money. The survey found six out of ten plan spending, over half take a 'bucket' approach - using different accounts for spending versus saving, and close to one in four use budgeting tools to save or invest.

Ready, steady...hold

Monthly interest rate meetings at the Reserve Bank must have a real Groundhog Day feel to them. The Reserve Bank kept the cash rate on hold yet again in its December meeting, the 12th consecutive 'steady as she goes' decision.

It's now been 11 years since Australia experienced an official rate rise. That's a whole generation of homeowners who have never had to deal with rising interest rates.

The Reserve won't meet again until February 2022, but there's a growing buzz around the possibility of future rate hikes.

In its latest banking roundup, comparison site Mozo says plenty of lenders have hiked their fixed rates, which could mean home owners have missed the boat when it comes to locking in a super-low rate.

But there are still some great variable rate deals up for grabs. Mozo reports a rush among banks to slash variable rates, with more lenders joining the 'below 2%' club, at least for owner occupier loans.

More niche ETFs hit the market

As the exchange traded fund (ETF) market becomes increasingly crowded, a growing number of themed funds focus on global mega-trends.

This week saw BetaShares launch three new themed ETFs. One focuses on innovative car technology (think Tesla and Uber); another has a Future of Payments theme, which will target companies like PayPal, Square and Affirm. Rounding out the three, the BetaShares Video Games and E-sports ETF offers access to video gaming and e-sports companies such as Roblox.

These newcomers join other ETFs that specialise in everything from robotics and automation to hydrogen, semi-conductors and cryptocurrencies. The US market even has ETFs with a work-from-home theme.

Are themed ETFs a good investment? Most haven't been around long enough to notch up long term results. However, a Swiss-based study found niche ETFs may appeal to "sentiment-driven investors", adding that after launching, these products can "perform poorly as the hype around them vanishes, delivering negative risk-adjusted returns".

Get stories like this in our newsletters.

Related Stories

A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.