How to choose payment methods for your Australian business

• Debit and credit cards, digital wallets, bank transfers and BNPL are some of the most popular payment methods in Australia

• 77% of consumers will abandon their cart if their preferred payment method isn't available, showing the importance of offering a range of payment choices

• Airwallex brings payment choice to your customers, with our payment solution having over 160+ payment methods including the major card schemes, the ability to collect payments in 130+ currencies, and like-for-like settlement to avoid forced conversion.

As a business owner, the payment methods you accept can have a huge impact on revenue. Most customers want to pay with their preferred method, and if they can’t, they may walk (or click) away. 

Cash has been in decline for a while now, especially among younger generations; in Australia, under-25s use it for just 3% of their transactions.¹ Meanwhile, digitised options are surging in popularity across all age groups. 

It can be tough to keep up with changing customer preferences, which is why we’ve put together this guide. 

Below, we explore some of the most popular online payment methods in Australia, including card transactions, digital wallets, bank transfers, and buy now, pay later (BNPL). We also cover the key questions to ask payment processors so you can choose the best service for your business.

What is the most popular payment method in Australia?

Card transactions are the most popular payment method in Australia, accounting for 76% of payments.² As cash use has decreased, debit and credit cards have become the most convenient go-to. 94% of these card payments are contactless, and one-third of those are via a mobile device (often using digital wallets like Google Pay or Apple Pay).

Popular payment methods in Australia

Payment methods have become so critical to the customer experience that they’ve been shown to directly impact revenue. In fact, 77% of consumers claim they will likely abandon their cart if their preferred payment method is unavailable. So, while no single payment type is best, offering the most popular payment methods can positively impact your bottom line.

Here are some of the most popular payment methods in Australia:

Debit and credit cards

The popularity of debit and credit cards is driven by the strong growth in online shopping and the desire for convenience. The major card providers include Visa, Mastercard, and American Express.

Benefits: Most businesses accept debit and credit cards, making them convenient payment options for businesses and consumers. Card payments facilitate quick, easy transactions and offer useful features such as tap-and-go. 

Considerations: Every card transaction comes with a cost, with card payments attracting fees charged by the card issuing bank, the card network, and the payment processor. While you can’t avoid these fees altogether, you can minimise them by selecting the right payment processing partner and passing a portion on to customers as a surcharge. 

Digital wallets 

Digital wallet payments are a form of contactless card payment carried out on a mobile device, such as a smartphone or smartwatch, using digital wallets like Apple Wallet, Google Wallet, and Samsung Pay. 

Since 2018, the number of digital wallet transactions has increased by 8,100%, and the value of those transactions by 12,300%.³ And today, Australians are among the top users of cashless and digital payments globally.

Benefits: Digital wallets offer ease, speed, and convenience. For consumers, setting up a digital wallet is as easy as adding credit card details to a digital wallet app, which lets them make purchases by simply tapping their device. Digital wallets offer additional security features, such as fingerprint or PIN verification. 

Considerations: To accept digital wallet payments, your business needs a point-of-sale (POS) system to process this payment type. This may involve renting a compatible EFTPOS (electronic funds transfer at point of sale) machine or downloading an app onto a compatible device.

Bank transfers

Bank transfers, including direct deposits and the electronic bill payment system BPAY, are commonly used for personal and business transactions. They are especially popular for recurring payments and larger transactions.

Benefits: Direct transfers between banks are known for their high levels of security, so they are generally considered safe and reliable. They are also suited to larger transactions as they generally have higher limits than other payment methods. 

Considerations: Depending on the banks involved, transfers can take anywhere from a few hours to a few days. They are also subject to the operational hours of banks and don’t provide instant confirmation of payment, making them less convenient than other payment options.

Buy Now, Pay Later (BNPL)

BNPL services, such as Afterpay, ZipPay, and Klarna, have grown in popularity. These services let customers buy now and pay in instalments over time, instead of paying the full amount upfront. According to recent research by Finder, 41% of Australians said they’d used a BNPL service in the last six months (as at March 2024), with Gen Z and millennials being the most likely to use these services.⁴ 

Benefits: Offering flexible payment options can appeal to customers who prefer to spread out payments over time, which can be particularly useful for larger purchases. This can help attract more customers, increase sales, and improve the overall customer experience. 

Considerations: BNPL fees are often higher than traditional payment methods and typically include a percentage of the transaction value. BNPL can also contribute to customer debt issues and may present a reputation risk for ethical brands.

How do I choose the right payment methods for my business?

Offering the right payment methods helps facilitate smooth transactions, keeps your customers happy, and drives business growth. Here are some key things to keep in mind when choosing the right payment methods for your business:

Understand your customers’ preferences

Knowing how your customers prefer to pay is the first step in choosing the right payment options. To gain a better understanding, you can:

• Ask your customers directly. Run surveys, polls, or incorporate questions into your customer service interactions to ask your customers about their preferences. 

• Analyse purchase history. Mine your past transaction data to identify popular payment options. Consider other data points, such as abandoned cart and value-per-transaction data, to gain a deeper understanding of potential missed opportunities. 

• Consider market demographics. Review reputable research that shares payment preferences across demographics, purchase types, and adoption rates. To get across the latest trends and research, check out our top 37 eCommerce statistics to help boost your sales in 2024.

Compare fees and costs 

Managing and minimising payment processing fees is essential for businesses looking to protect their operating margin. When evaluating your payment methods options and providers, you’ll need to consider the financial implications of transaction fees, currency conversion fees, rates, termination fees, settlement times, setup costs, maintenance, and more. We’ve provided a detailed list of the top payment processing software and service providers to help you get started with your comparison. 

Review security and fraud protection measures

With the rise in high-profile data and security breaches in recent years, it’s no wonder security is top of mind for businesses and consumers alike. To mitigate the risks of financial loss, legal consequences, and reputational damage, businesses need to offer payment methods that meet the highest security standards. The three main pillars of safe payments to consider are:

• Authentication: This verifies the identities of parties in a transaction, using methods like the CVV code and multi-factor authentication to prevent card fraud.

• Confidentiality: This ensures customer data and card details are kept private during transmission and storage, primarily through encryption.

• Integrity: This guarantees the accuracy and trustworthiness of transaction data, using methods like digital signatures and secure protocols to prevent tampering.

Consider integration with your existing systems

The payment methods you choose should seamlessly integrate with your current business systems, including your eCommerce, accounting, marketing, sales, and inventory systems. With the right payments processing provider supporting seamless integrations, you can:

• Automatically sync, reconcile, and categorise transactions and make it easier for your customers to pay you worldwide.

• Streamline order data and inventory management.

• Let global customers to pay in their preferred currencies and payment methods.

• Start automating common processes without coding.

Offer multiple payment methods

The availability of multiple payment methods has become part of creating an easy checkout experience, with 84% of consumers saying a wide range of payment options enabling fast checkout is essential or important.⁵ Offering variety helps improve the payment experience by providing:

• The flexibility for consumers to choose their preferred payment method

• Alternative options if one method fails or isn’t suitable

• A convenient, smooth, and hassle-free purchase experience

What questions should you ask when choosing a payment methods provider?

To find a payment processing provider that aligns with your business needs, it’s important to ask the right questions and get a clear understanding of what you’re signing up for. Here are some key questions you can ask to help you make an informed decision:

1. What are the fees and costs involved?

Ask about transaction fees, monthly charges, setup costs, conversion fees, hidden charges, and early termination fees to understand all potential costs. These details can significantly impact the bottom line, as Kat The Label discovered. By partnering with Airwallex, the business was able to save an annual AUD$156,000 in foreign transactions.

2. How secure are your payment methods?

Since handling credit card payments involves sensitive information, ask about the provider’s security policies, fraud prevention measures, authorisation rates, and compliance standards to protect your customers' data. See our article on the security features to look out for in a payment processor to get a better understanding of security and the questions you need to ask.

3. What payment methods do you support?

Check that the payment processing provider can offer the variety of options your customers want and cover all your business needs, such as multi-currency transactions and international payments. Also, consider your longer-term business goals and payment methods trends, and whether the payment processing provider can cater to these changes.

4. How does your system integrate with the software we currently use? 

Seamless integration with your existing software, like eCommerce platforms, accounting tools, or CRM systems, is crucial for efficient operations and smooth payment processing. Find out what’s involved in setup and maintenance, and what skills you will need in your business to manage this.

5. What is the transaction speed and reliability?

The speed of fund settlement impacts cash flow, so ask how long it typically takes for transaction funds to be deposited into your account. Learn more about their reliability and how they handle any transaction disputes.

6. What kind of customer support do you offer?

Effective customer support is essential for resolving payment issues quickly. Key aspects to ask about include:

• Availability: Is customer support available often?

• Support channels: What channels are available? For example, phone, email, and live chat.

• Response time: What is their average response time for resolving issues?

7. How do you handle refunds and chargebacks?

Efficient refund and chargeback management is vital for maintaining customer trust. Learn about the provider’s process for managing chargebacks and whether they offer support or protection, which can help mitigate future losses.

8. What additional features do you offer?

Your payment processing partner should offer more than basic transaction data. Providers that offer additional features like analytics, reporting tools, or marketing insights can help you add value across your business to improve the customer experience, streamline inventory management, address common financial operations challenges, and more.

How does Airwallex help businesses with their payment methods?

At Airwallex, we accept payments for your business from customers worldwide via their preferred payment methods, with no coding required. 

Here’s why our customers choose us as their preferred payment solutions provider:

• Comprehensive payment coverage: Airwallex brings payment choice to your customers. Our payments solution offers 160+ local payment methods, plus processing with all major schemes including Visa, Mastercard and Amex.

• Multi-currency payment acceptance. With Airwallex you can also collect payments in 130+ currencies and settle like-for-like in 20+ currencies, allowing you to avoid forced conversions.

• Comprehensive global coverage: We offer multi-currency accounts and facilitate high-speed international transfers, letting businesses operate globally with ease. You can open local currency accounts in 21+ countries, accept payments from 70+ countries, and make transfers to 200+ countries. 

• Cost efficiency: By offering competitive interbank rates and minimising unnecessary foreign exchange fees, we help businesses improve their profit margins and free up funds to grow their business.

• eCommerce and checkout solutions. Our platform seamlessly integrates with software such as Xero and Shopify, helping to streamline financial operations. We also have our own checkout solution to let customers pay in their own currency.

• Security and reliability: With 70+ security licences and permits globally, we meet the highest international security measures and local requirements.

• Proven track record: We’re trusted by over 100,000 businesses to help them manage their global payments and finances.  

FAQs about payment methods

What are the most popular online payment methods in Australia?

Popular online payment methods in Australia include credit and debit cards, bank transfers, BPAY, digital wallets such as PayPal, and Buy Now, Pay Later (BNPL) services like Afterpay and ZipPay.

How quickly can I set up a payment method?

The time taken depends on the payment method and the payment provider chosen. Digital wallets can often be set up within minutes to a few hours, while integrating a new credit card processor or setting up bank transfers might take a few days to a week. Online payment platforms such as Airwallex streamline this process, offering fast and efficient setups for your business. 

Is it expensive to set up a payment method?

The cost of setting up a payment method varies based on the provider and services needed. While digital wallets and online payment platforms have minimal setup costs, integrating credit card processors or comprehensive payment solutions may include initial setup fees and ongoing transaction charges. Airwallex offers competitive pricing and cost-effective solutions for setting up different payment methods for your business.

What is the safest way to pay online in Australia?

The Australian government recommends using a credit card, BPAY, or PayPal to maximise security.⁶ These methods let you open a dispute if you encounter issues like unauthorised payments. But it’s still important to take precautions. For instance, it’s best to avoid using online banking services while connected to public WiFi networks and sending sensitive financial information over email or SMS.

References

1. https://rfi.global/the-revolution-of-payments-in-australia/ 

2. https://www.rba.gov.au/snapshots/how-australians-pay-snapshot/ 

3. https://www.ausbanking.org.au/bank-on-it-customer-trends/ 

4. https://www.finder.com.au/buy-now-pay-later/buy-now-pay-later-statistics 

5. https://www.commbank.com.au/business/foresight/reports/consumer-insights-report.html 

6. https://www.cyber.gov.au/protect-yourself/staying-secure-online/shopping-and-banking-online/online-shopping/while-you-are-shopping

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) it is important for you to read the Product Disclosure Statement (PDS) for the Direct Services, which is available here.