Payment Landscape in Australia

The world of commerce is changing, and so is Australia’s payment landscape.

Due to the increasing consumer need for more flexible and diverse payment methods, international and domestic companies have started devising innovative solutions. These payment solutions allow Australian consumers to make purchases with more flexibility.

These solutions come as a direct response to the number of people in the 18-36 age bracket increasing by half a million. They now make up for the 26% of Australian population, and opt for more seamless financial tools like digital wallets.  

Not only useful for making easy transactions, the new solutions present in the payment landscape in Australia safeguard consumers against frauds and the increasingly high risk associated with making card-not-present transactions.

This guide will provide an overview of the new payment methods in the shifting payment landscape in Australia. Safe and quick, there are plenty which can be used to create a frictionless payment experience for consumers and merchants alike.

Benefits of a Shifting Payment Landscape in Australia

eCommerce is on the rise. Global eCommerce sales are expected to reach $4.5 trillion, with Australia being one of the top 10 competitors in the space. This is significant because back in 2013, eCommerce sales in Australia were at AU$26.77 billion growth.

By 2017, growth reached AU$32.56 billion, which demonstrates an increased average annual spend of $4,500.  

Similarly, online shopping in Australia in 2017 increased by 10%. And with free shipping options and numerous other benefits available to Australians who love shopping online, stores with physical locations have had to compete to offer the same flexibility eCommerce has been offering for almost a decade.

Digitally native retailers could seamlessly adapt to changes, while the same hasn’t been true for retailers who’ve stayed loyal to delighting their customers locally.

A lack of universal solutions both consumers and retailers could be comfortable with was a hindrance in the way of physical retailers.

However, ever since the payment landscape in Australia has started shifting, new payment solutions have enabled Australia to drive the intent to go cashless by 2022 home.

Both a benefit for consumers and a benefit for merchants, this brave new payment landscape will change how Australia sells and buys forever.


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Benefits of EFTPOS in Australia

Keeping Australia’s intention to go cashless by 2022 in mind, we’ll start off simple with the EFTPOS system most consumers and retailers are familiar with.

EFTPOS, short for Electronic Funds Transfer at Point of Sale, is the most common solution for paying with cards in physical stores. An alternative to cash transactions, this method has been in use in Australia since the 1980s as both a pre-paid and debit payment method.

The numbers are the proof of the popularity of this method: in 2017/18, Australian consumers performed more than 1.8billion EFTPOS transactions. All of these transactions amounted to AU$115 billion spent at over 900,000 terminals.

EFTPOS essentially paved the way for other cashless payments method that now comprise the payment landscape in Australia.

Benefits of NPP in Australia

Launched in February 2018, Australia’s New Payments Platform (NPP) is a significant innovation in the way Australians sell and make purchases.

NPP is a direct entry electronic payment product in the payment landscape in Australia, and it enables consumers and businesses to make real-time payments. Direct entry is known for accounting for only 16% of total transactions, while amounting to 88% of the transaction value in 2015.

Unlike the standard methods which have allowed people to do the same, NPP doesn’t require users to use BSB or bank account numbers. Instead, NPP allows Australians to transfer money with a phone number or their email address.

NPP offers consumers a more seamless payment experience even with omnichannel payments, while also allowing businesses to benefit from instant money transfers and a much better cash flow.

Banks Are Catching On to New Payment Methods in Australia

With the rising availability of alternative payment methods, Australian consumers have started demanding more from their banks.

Direct debit and direct credit are no longer enough. Major Australian banks have added a variety of products reminiscent of digital wallets (and digital wallet options themselves) to support the consumers’ need for online retail.

Commonwealth Bank of Australia Methods

CommBank supports the advancements in the new payment landscape in Australia with a plethora of payment methods.

From NetBank and banking apps, Commonwealth Bank of Australia expanded their offer to include payment products such as Tap & Pay.

Tap & Pay is a payment product allowing users who bank with CommBank to pay on the go using a smartwatch. All users have to do is add their credit or debit card to apps like Fitbit Pay or Garmin Pay.

Additionally, Commonwealth Bank of Australia added digital wallets like Samsung Pay and Google Pay. In order to keep the transactions secure, they use the newest NFC payment technology and encrypt all financial communications.

In addition to advanced payment products, they offer a standard banking instant transfer solution – Beem It. This allows users to request and transfer money immediately from account to account using their mobile phone.

Australia and New Zealand Banking Group Payment Methods

In addition to mobile apps and internet banking, ANZ added digital wallet support to their payment method offer.

Understanding that consumers are increasingly using their mobile phones to transfer money and pay for goods and services, ANZ has supported the cashless by 2022 initiative.

The first payment innovation from ANZ that contributed to the changing payment landscape in Australia was digital wallet integration.

Unlike CommBank that only supports Samsung and Google Pay, ANZ supports those methods and brings Google Pay to the table.

Users who bank with ANZ can select a card to use with Apple Pay, and rest assured that their sensitive financial information isn’t shared with anyone – not even merchants.

ANZ also stimulates merchants who bank with them to consider the benefits of Apple Pay, such as integrating Apple Pay with their eCommerce store fronts, and choosing from ANZ PoS solutions.

They adopt the same approach to Google Pay and Samsung Pay, with iris scan being available for Samsung devices from S8.

Westpac Payment Solutions

Westpac’s alternative payment method solutions are divided into three categories: wearables, mobile wallets, and peer-to-peer lending.

Wearables are a relatively new product on the market, allowing users to pay with their smartwatches, but they’ve become a standard feature on the offers of major Australian banks which want to offer consumers a frictionless payment experience.

With Westpac, users can use Fitbit Pay, Garmin Pay or PayWear to pay on the go.

PayWear is relatively innovative in the Australian payment landscape, as it’s Westpac’s trademarked solution. It’s a chip linked to a bank account, and it can be inserted into a PayWear wearable.

Since PayWear uses the same technology as debit cards, it’s a sleek experience – especially for Australians who love paying on the go.

PayWear accessories also come in a variety of designs that users can choose from – ranging from simple silicone keepers to stylish accessories. This is quite an interesting development in banking tech accessories, as it speaks to audiences who not only want a sleek payment experience, but a stylish presentation of their payment tools.

When it comes to mobile wallets, Westpac keeps it simple and features only two of the digital wallets their users use the most: Samsung and Google Pay.

Finally, with peer-to-peer lending, users can choose between Osko real-time payments and the Beem It app. Both of these methods are focused not only on eCommerce and sleek PoS payments, but on sharing money between family and friends.

National Australia Bank Payment Options

Just like the majority of other Australian banks which have started adapting to the shifting payment landscape, National Australia Bank has a NAB app that uses the Pay ID technology to send payments in real time.

Android phone users can use the NAB Pay option to tap and pay, and iPhone users can use the NAB PayTag to do the same. For those who want something more, National Australia Bank also has Google and Samsung Pay integrations.

NAB’s mobile payment offers are reminiscent of those other banks provide (including wearables, fast payments, and Beem It), with one very important exception:

Virtual assistants.

Consumers who bank with NAB can use voice assistants (Amazon Alexa and Google Home) to perform a variety of tasks such as:

  • Review recent transactions
  • Determine recent transactions
  • Find out exchange rates
  • Pose general banking questions

“Talking to NAB” certainly makes enquiries into the state of accounts and the bank’s offers easier for 21st century consumers who want information immediately.

And for consumers who’d rather pay for their online purchases in instalments, NAB offers the Afterpay system which allows them to pay in 4 instalments, interest-free.

The system is subject to availability in stores which have integrated Afterpay with their payment processing, but retailers such as Scotch & Soda and RayBan are already using it.  

Open Banking in Australia

Since consumers want immediate payment processing – both when they’re buying from merchants and when they’re sharing money with friends and family – payment landscape in Australia is forced to change.

The idea of open banking has been present in the world for a while. However, it only came to Australia recently, and the matter is urgent. Where banks have been slow to adopt new developments, fintech companies haven’t.

Australian consumers have had access to fintech such as PayPal and a new Australian startup, Zip Money and their Pocketbook app. Startups like Zip Money are not trying to replace traditional banks, but provide an open banking experience which means using the customers’ data from banks to enhance each customer’s experience.  

In the case of Pocketbook and other similar payment alternatives, their APIs are gathering data on banking transactions, but can’t process transactions within the app.

Open banking promises to change that, and allow consumers to use fintech that suits them best – be it independent startups providing a better customer experience, or traditional banks.

The main appeal of open banking to consumers lies in competitive products better suited to their needs. Banks have had the monopoly in the financial space for a long time, and the new products give more freedom – from payment methods to interest rates on loans.

For example, ZipPay offers short-term loans consumers can use to purchase from online retailers and pay them back in instalments. The loan limits are determined based on credit checks, and they can be up to $10,000. ZipPay doesn’t charge interest rates, but it does have a flat monthly fee.

Similarly, Prospa is a fintech product that offers short-term loans to businesses. Loans vary from $5000 to $250,000, with flexible payback terms. One of the main advantages is the short process; customers can receive their funds within one business day.  

The vast majority of open banking fintech products are created to provide better conditions for private and professional loans. This is especially important for small businesses across Australia who typically don’t have easy access to traditional funding.

The main prerequisite for the changes that open banking could bring to the payment landscape in Australia is access to financial data.

Due to legislative changes and the slow adoption of open banking, as well as Australians’ wariness of sharing their financial information with third parties, the changes are expected to occur no sooner than by the end of 2021.

By July 2019, Australia’s big four banks – Westpac, ANZ, NAB and Commonwealth Bank – are expected to provide access to transactional, debit and credit accounts to API developers. Mortgage data should be made available by February 2019.

Other financial institutions should follow suit, with the final deadline being July 2021.

If properly implemented, open banking changes could truly shift the payment landscape in Australia.

And even though consumers are appreciative of each change that makes performing financial transactions easier, there will be nothing like having easy access to funding – under fair conditions.

Australia may have been slower to adopt retail changes, but it’s quickly becoming one of the best markets to do business in.

It’s only natural that payment methods follow suit.


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