Australia’s payment landscape is rapidly evolving, propelled by technological advancements and changing consumer preferences. This article explores the evolving payment methods in Australian commerce for 2023. It covers everything from classic card payments to modern digital wallets. We look at major market players and trends in different sectors. Our insights reveal a future dominated by digital and cashless transactions.

Payment by card in Australia

In the Australian e-commerce sector, the transition from cash to electronic payments, notably debit and credit cards, has been significantly accelerated by the COVID-19 pandemic, as highlighted by the Reserve Bank of Australia’s June 2023 Bulletin on Consumer Payment Behaviour​​ (rba.gov). The credit and charge card market in Australia is on an upward trajectory, with an expected growth of 9.1% in 2023, as reported by GlobalData​​. This follows a substantial increase observed in 2022. The market is buoyed by over 13 million credit cards in circulation, while debit cards have emerged as a dominant form, representing 75% of card payments in the fiscal year 2021/22, according to Finder’s 2023 statistics on Australian credit and debit cards​​. Adding a unique local flavor to this mix is Eftpos, Australia’s own debit card scheme. Eftpos stands out with its issuance of 49 million debit cards, which include both proprietary and dual-branded options (with Visa or Mastercard), further diversifying the payment card landscape in the country, as detailed in the GlobalData report on Australia’s Cards and Payments​​.

This trend underscores a broader shift in consumer payment behavior, moving away from cash and towards more digital and card-based solutions. The growth in the credit and charge card sector and the widespread use of debit cards, especially the local Eftpos cards, reflect an evolving retail payments landscape that accommodates both traditional and modern payment preferences, a development also discussed by the Reserve Bank of Australia in its Payments System Board Annual report and by Adyen’s overview of payment methods in Australia​​​​.

Local actor: Eftpos

Eftpos payment method

Payment by bank transfer

In Australia, Bank transfers, including instant payments, hold a notable position in Australia’s e-commerce, with a 16% preference among consumers (redsearch.com.au)​​.

Services like PayTo, developed by NPP Australia, are at the forefront of this transformation. PayTo enables secure, direct account-to-account transfers, bypassing traditional card networks. This method is rapidly gaining popularity for its efficiency and security​​.

Osko and PayID stand as key players in this market. They enable real-time transactions, boosting speed and convenience for all. Osko, known for quick payment processing, operates on the New Payments Platform (NPP). It’s widely favored for its round-the-clock availability. Meanwhile, PayID offers an easy option for payments. Users can pay using memorable details like phone numbers or email addresses, bypassing traditional account numbers.

Becs Direct Debit, and specifically B Pay, represent another facet of Australia’s bank transfer ecosystem. BECS Direct Debit is primarily used for managing recurring payments, offering businesses a cost-effective way to handle regular transactions​​. B Pay, on the other hand, allows for bill payments using unique identifiers, streamlining the bill payment process for both businesses and consumers.

These diverse instant payment solutions reflect Australia’s shift towards more digitalized and efficient payment methods, catering to a range of consumer preferences and business needs. The rise of these services indicates a broader global trend towards instant and digital payment solutions in the e-commerce domain.

Local actor: Osko, PayID, B Pay, BECS Direct Debit

OskobyBpay logo  Bpay logo BECS logo

NOTE:

POLi Payments, a bank transfer service, has recently announced that it will discontinue its operations in Australia as of September 30, 2023. This decision by Australia Post, which owns POLi, aligns with their strategy to simplify their product and service portfolio and ensure financial sustainability​​​​​​. However, it’s important to note that POLi will continue its operations in New Zealand, despite the shutdown in Australia​​.

Payment by installment and BNPL

In 2023, Australia’s BNPL sector is vibrant and evolving. It reflects changing consumer habits and regulatory landscapes. Notably, Afterpay leads with over 3.3 million users, indicating strong market presence. This is followed by Deferit, which secured a $15 million Series B funding for its bill payment services.

Spenda, with its increasing market value, strengthens the sector through strategic partnerships like the one with AgriChain. Humm, despite regulatory challenges, has shown improved financial performance. Beforepay, awarded the Ethical Lender of the Year, offers advances up to $2,000. In total, more than 1 million customers have now registered for Beforepay’s pay advance service. It boasts significant user growth.

Commonwealth Bank’s StepPay introduces a digital-first approach with up to $2,000 credit for purchases. Payo innovates in the hospitality sector with unique QR code-based self-checkout. RapidPay caters to small law firms, integrating seamlessly with LEAP software.

PayItLater, partnering with SMEs, offers a $1,000 spending limit with fixed late fees. Zip remains operational despite global restructuring, a testament to the resilience of the Australian BNPL market.

In summary, Australia’s BNPL landscape in 2023 shows dynamic growth, diverse offerings, and adaptive strategies, ensuring its pivotal role in the financial ecosystem.

Local actor: Afterpay, Zip, Spenda, Deferit, BeforepayStepPay, Payo, RapidPay, PayItLater, Humm

Afterpay Logo Zip logo Spenda logo BeforePay Logo  PayItLater logo Humm Logo

 

Payment by digital wallet and X-Pay

The e-wallet market in Australia is experiencing growth, with e-wallets predicted to surpass credit cards as the leading e-commerce payment method by 2024. Currently, online credit cards are predominant, but e-wallets are catching up, especially in POS sale transactions​​. Notable trends include the introduction of QR code-enabled mobile payments and a significant overhaul of the regulatory landscape, aiming to refine payments regulation and consumer protections​​.

Beem, formerly Beem It, is a key player in Australia’s digital wallet market. It offers instant payment, money transfer, and splitting services. The app is free, secure, and user-friendly. Beem’s unique features include loyalty and gift card management, and it recently launched Beem Rewards, attracting over 500 merchants.

Targeting a large user base, Beem has over 1.4 million Australian members. Its focus is on enhancing consumer experience in both digital and physical domains, indicating a strong market presence and customer-oriented approach. The platform’s evolution includes new services and features to expand its reach and utility in Australia’s digital wallet landscape (Retail World Magazine).

Up is an Australian digital bank offering innovative e-wallet services. This platform integrates banking and digital payments seamlessly. Its e-wallet caters to a tech-savvy user base, with features like instant notifications and transaction categorization. Up’s appeal lies in its all-in-one solution for modern banking and digital payments. Its market presence is notable among younger, digitally inclined consumers. The service is designed for those seeking convenience and efficiency in financial management. Up represents the evolving landscape of digital wallets in Australia, blending traditional banking with contemporary digital needs​ (getewallet).

Local actor:  Beem, Up

Beem payment method Up payment method

 


 

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