The Squeezed Middle in Digital Financial Services: Ireland's Warning for European Consumer Protection Policy

This paper examines how digital financial services affect consumer welfare across income distributions using Ireland as a critical case study for European consumer protection policy. We identify a "squeezed middle" phenomenon where households between the 20th and 70th income percentiles experience persistent financial strain despite technology access. Young adults remain in negative financial well-being through the 70th income percentile despite 96.2% technology access, suggesting structural barriers that technology cannot address. Immigration status creates the largest technology gap at 40.7%, yet technology fails to explain welfare disparities between immigrants and natives. These findings challenge the European Union’s €150 billion digital infrastructure investment introduced on automatic consumer benefits. Three mechanisms explain this failure: capability mismatch where technology exceeds user capabilities; economic constraints override where structural barriers overwhelm technology benefits; and satisfaction illusion where technology increases perceived control without improving outcomes. As Europe’s most digitalised economy, Ireland provides an early warning for other member states.