Debit Card Dominate Cashless Digital Shoppers
Introduction to Australia
An overview of Australia's currency, population and key statistics.
Australia's official currency is the Australian dollar (AUD), which is divided into 100 cents. Both coins and banknotes are used as forms of currency in Australia, with different denominations available for each.
The coins include 5, 10, 20, and 50 cents and A$1 and A$2. On the other hand, notes come in A$5, A$10, A$20, A$50, and A$100 denominations, each with a unique colour and design.
The coins and notes feature various cultural and historical elements that represent Australia, such as famous landmarks, animals, and personalities. The Reserve Bank of Australia (RBA) is tasked with designing and producing the currency in circulation.
Australia does not currently have a digital currency but the RBA launched a research project in mid-2022 to investigate the feasibility of a central bank digital currency (CBDC).
The CBDC will be a new type of digital money issued by the RBA. The central bank will conduct the trial using distributed ledger technology, commonly known as blockchain.
In 2020, the United Nations reported that Australia had approximately 25.5 million residents. However, according to Worldometer's analysis of more recent UN data, the country had a population of 25.7 million as of 2021, with the majority (85.9 percent) residing in urban regions, particularly in Sydney. The median age of the population was 37.9 years.
Languages spoken in Australia
Australia does not have an official language by law, but English is widely spoken and has been the unofficial national language since European colonization.
In 2021, Australia had a gross domestic product of more than $1.5 trillion, accounting for 0.70 percent of the global economy, as reported by the World Bank. The Australian Bureau of Statistics reported that the country's economy expanded by 0.5 percent in the final quarter of 2022.
Meanwhile, Australia's household saving rate dropped to 4.50 percent in the fourth quarter of 2022 from 7.10 percent in the third quarter of the same year. Data compiled by PPRO APAC show that all Australians had bank accounts in 2020 and 60 percent owned credit cards.
Australia's internet & mobile phone trends
DataReportal records show that internet penetration in Australia was at 88 percent as of January 2023, with a total of 22.82 million users in January 2021. Based on the same source, this is a slight decrease from the previous year, when internet penetration stood at 89 percent. Additionally, the PPRO APAC Report shows that smartphone penetration in Australia stood at 84 percent as of the end of 2020.
While current data on the percentage of internet users by age group in Australia is unavailable, a survey conducted by Statista in December 2019 showed that 3.76 million respondents between the ages of 25 and 34 had internet access, although the total number of respondents surveyed was not disclosed.
Australia e-commerce stats
Based on the PPRO APAC Report, Australia's average annual revenue per paying customer was $1,935 in 2020. When it comes to cross-border e-commerce, the majority of purchases made by Australians are products from China and the United States, with the United Kingdom following close behind.
Summary of Australia's fiscal policy
The medium-term fiscal strategy introduced by the previous government for 2020 to 2021 remains in effect in the 2022-2023 budget. This strategy focuses on several key elements. These elements include stabilizing and reducing gross and net debt as a percentage of the economy, achieving a budget balance over the economic cycle in line with debt objectives, and maintaining the efficiency and quality of government spending while controlling expenditure growth.
The strategy also aims to ensure the provision of essential services and support revenue growth through policies that encourage earnings and economic growth. It also aims to maintain a tax burden below a tax-to-GDP ratio of 23.9 percent and use the government's balance sheet to facilitate productivity-enhancing investments that will create jobs and support private investment.
Australia's recovery from the coronavirus pandemic, recent natural disasters, and the global geopolitical landscape provide the context for the 2022-2023 budget. That is why ongoing structural reforms are also necessary to boost economic growth. These structural reforms will help build a stronger economy, support private investment, and create jobs.
How people pay in Australia
An overview of how people in Australia choose to make payments.
Traditional payment methods
The primary traditional payment methods used in Australia.
Despite a decline in the share of cash payments, cash withdrawals have remained steady in Australia, according to the RBA. In December 2020, 34.7 million ATM withdrawals worth $9 billion were made, suggesting continued demand for cash. Nevertheless, electronic payments continue to gain popularity among Australian consumers.
Visa is a global payment technology company that offers electronic payment solutions through Visa-branded credit or debit cards. Some popular Visa cards in Australia include Kogan Money Black Card, NAB Rewards Signature Card, ANZ Low Rate Card, and ANZ Platinum Credit Card.
Mastercard is a global payment and technology company that processes payments between retailers' banks and card-issuing banks. Some examples of Mastercard credit cards available in Australia include the Bankwest Breeze Mastercard and the Community First Bank Low Rate Credit Card.
Alternative payment methods (APMs)
The top APMs used in Australia.
Apple Pay, a mobile payment service from Apple Inc., enables users to make in-person, online, and in-app payments. It replaces chip and PIN transactions at contactless terminals.
PayPal is a widely used online payment platform that allows customers to pay with their PayPal account balances, credit cards, or bank accounts. Shoppers use PayPal to make online purchases and securely send or receive money.
POLi Payments is a digital payment platform that operates in Australia and New Zealand, offering a secure payment service through internet banking to businesses. It collaborates with significant banks across Australia, facilitating direct payment transfers from consumers' internet banking accounts.
BPAY is a bill payment system commonly used in Australia, allowing payments to be made through a financial institution's online or telephone banking facility. This system was developed by major Australian financial institutions and has become a prevalent method for consumers to pay their bills, including but not limited to utilities, credit cards, and phone bills.
eWAY is an Australian payment platform that provides international payment channels through its branches in Australia, New Zealand, Singapore, Hong Kong, and Macau. It was launched in 1998. It now processes billions of dollars in transactions from thousands of companies annually and focuses on providing safe and reliable payment gateways for merchants.
How to accept payments in Austalia
A guide to accepting payments in Australia.
How to accept payments online in Australia
Before accepting online payments, you must determine which methods you prefer. Then, you can choose a payment gateway provider, a service that authorises and processes online payments with their specific system.
Although there are plenty of payment gateway options in Australia, the general process for online payments typically involves an acquirer, issuer, retailer, and cardholder in the following steps:
1. The cardholder initiates a payment by presenting their payment card to the retailer to purchase goods or services.
2. The retailer sends the payment details to the acquirer (payment processors such as ANZ eGate or SecurePay), who processes the payment request and sends it to the payment scheme (such as Mastercard or Visa).
3. The payment scheme sends the payment request to the issuer (such as a bank or licensed issuer) who issued the card to the cardholder.
4. The issuer checks if the cardholder has enough funds to complete the transaction and approves or declines the payment request. if the payment is approved, the issuer sends an authorisation code to the payment scheme.
5. The payment scheme sends the authorisation code to the acquirer, which then sends it to the retailer, completing the transaction.
How long does an international payment from Australia take?
The processing time for payments may vary depending on the method and the recipient's bank. For instance, online money transfers through platforms like PayPal and Wise can be quick and convenient for sending money to multiple destinations.
Bank debit/credit cards: International payments with bank debit or credit cards may take a few minutes to a few hours, depending on bank processing times.
Online money transfers: Platforms like PayPal can process international payments within minutes to hours, depending on the service and destination country.
SWIFT/wire transfers: Traditional bank-to-bank transfers via SWIFT or wire may take one to five business days or longer, depending on the destination country, intermediary banks, and transaction requirements.
Merchant fees for online payments in Australia can vary depending on the payment method and the merchant services provider used.
Here are some examples of typical merchant fees for online payments in Australia:
Credit and debit cards: Merchant fees for accepting credit and debit card payments online can range between one to 1.5 percent of the transaction amount. But it varies depending on the type of card used and the merchant services provider.
PayPal: For domestic payments, PayPal charges a fee equivalent to 2.6 percent of the transaction value, along with a fixed fee of A$0.3. As for international online payments and invoices, PayPal charges fees ranging from A$0.99 to A$4.99 plus exchange rate markup depending on the amount sent.
Bank transfers: Bank transfer fees can vary depending on the bank used, with some banks charging a flat fee per transaction and others charging a percentage of the transaction amount.
Other fees surrounding online payments in Australia include charges incurred by merchants, payment processors, and financial institutions involved in the payment processing chain. Below are some common fees:
Interchange fees: Interchange fees are charges paid by merchants' banks to cardholders' banks to cover the costs of processing card transactions. These fees are usually based on a percentage of the transaction value and can vary depending on the type of card used and the merchant's industry.
Payment gateway fees: Payment gateway providers charge a fee for processing transactions on their platform, which may be a percentage of the transaction value or a flat fee per transaction.
Cross-border fees: If a merchant accepts payments from customers outside the country, they may be subject to additional fees for cross-border transactions, including currency conversion fees and international processing fees.
Merchant discount rate: A processing fee that merchants are charged for transactions made using credit or debit cards. This fee generally falls within the range of 1 percent to 3 percent of the total transaction amount.
Security challenges of online payments in Australia
In 2022, online fraud and data security posed significant security challenges for online payments in Australia. Cybersecurity breaches and cybercrime are on the rise, exacerbated by the increasing digitization of our world, which presents new opportunities for cybercriminals. The pandemic further exacerbated the situation by pushing organizations into home office or remote work, exposing them to a range of new IT requirements and security risks.
The financial cost of cybersecurity breaches is high, with an average cost of nearly US$3 million per data breach in Australia alone. However, the financial impact is not the only consequence of cyber-attacks. Organizations worldwide also suffer lasting reputational damage, loss of customers, and difficulty attracting new ones.
To ensure the safety of online payments in Australia, industry players like banks, payment processors, and fintech companies need to collaborate and implement robust security measures against cybercrime.
Banks, for example, are responsible for safeguarding their customers' financial assets and personal information, while payment processors must secure their systems and encrypt transactions. Fintech companies must ensure the security of their platforms and educate customers about the risks of cybercrime and the importance of using strong security measures.
Key sectors & industries in Australia
An overview of the Australian market.
Australia's top 10 industries by revenue
The top 10 industries by revenue in Australia, according to IBISWorld, are:
Australia's State Government Administration industry encompasses activities carried out by the eight state and territory governments. The industry generates revenue from two primary sources – taxation revenue and grants and subsidies revenue, which account for about 73 percent of the industry's total revenue. The remaining revenue is generated from various sources, such as sales of goods and services, interest, dividends, royalties, and capital grants.
Over the past five years, the revenue from Australia’s professional services has grown by 0.5 percent to reach $263.2 billion, with a 3.4 percent decline in the current year, where profitability is expected to reach 11.3 percent.
Australia's consumer goods retailers have experienced mixed operating conditions. Regardless, this industry generated $208.0 billion in the last five years. The negative impact of coronavirus on the economy pushed consumer sentiment down to negative during 2019-2020. But online shopping has increased external competition, accelerated by coronavirus restrictions and social-distancing measures.
Despite facing challenges over the past five years, the finance sector of Australia has shown resilience and is expected to grow by 6.5 percent in 2022-2023, with an estimated revenue of $285.6 billion. Moreover, profitability has increased to approximately 38.4 percent of revenue.
Over the past five years, the health services sector has significantly expanded, covering the primary, secondary, and tertiary healthcare industries. This industry posted $171.8 billion in revenue over the past five years. General hospitals constitute more than half of the sector's revenue, with the remaining revenue derived from medical, allied health, and other healthcare services.
The Australian superannuation funds industry's revenue is closely linked to the performance of the share market, which has experienced fluctuations in the past five years. The industry's performance is often influenced by investment income, especially from equities, and the continuous contributions that contribute to the scale of investment returns for super funds. The industry's revenue is expected to decline by an average of 10.6 percent annually between 2018 and 2023, reaching $127.9 billion.
Since 2018, revenue from iron ore mining has experienced an annual growth rate of 8.1 percent to an estimated total of $124.1 billion. Despite an anticipated decline of 16.2 percent in 2022-2023, profitability is expected to reach approximately 49.5 percent. This upward trend in revenue can be attributed to both production growth and price increases within the industry. Domestic iron ore production is estimated to reach 975.6 million tonnes in 2022-2023. Australia is the largest global iron ore producer, responsible for over 50 percent of total production.
Australia's coal mining industry's revenue has an annualized growth rate of 14.6 percent, estimated to reach $157.0 billion. The sector is expected to grow in 2022-2023, with an anticipated increase of 15.7 percent, leading to an estimated profitability of 33.4 percent. The rise in coal prices has significantly contributed to this growth.
The supermarket and grocery store industry experienced a unique trend compared to most other industries during the coronavirus pandemic. In the five years leading up to 2022-2023, the industry saw a gradual annualized revenue growth rate of 2.2 percent, reaching $130.2 billion, with a further 2.1 percent increase expected in 2022-2023. The estimated profitability for the industry was 4.2 percent.
Despite a projected decrease in the banking industry's revenue for the last five, there is hope for recovery with an anticipated 21.5 percent increase in 2022-2023. Additionally, profit margins are expected to reach a high of 43.5 percent. The RBA is taking proactive measures to manage high inflation, aligning with the efforts of major central banks worldwide.
The Observatory of Economic Complexity reported that Australia's major exports were iron ore ($118 billion), coal briquettes ($54.3 billion), petroleum gas ($39.2 billion), gold ($17.6 billion), and wheat ($7.36 billion) in 2021. The top export destinations were China ($138 billion), Japan ($47 billion), South Korea ($29.4 billion), India ($20.5 billion), and Chinese Taipei ($13.2 billion).
In 2021, Australia’s top imports were refined petroleum ($19.6 billion), cars ($18.8 billion), delivery trucks ($8.08 billion), broadcasting equipment ($6.68 billion), and computers ($6.61 billion). The top import origins were China ($70 billion), the United States ($25.7 billion), Japan ($15.3 billion), Thailand ($12.1 billion), and Germany ($11.6 billion).
Regulations in Australia
The regulatory environment of Australia.
Summary of the regulatory environment in Australia
To maintain fairness and operational smoothness in business ventures in Australia, entrepreneurs are required to comply with a range of laws and regulations, which include:
Company law: This includes regulations governing companies' establishment, operations, and dissolution.
Employment law: This includes regulations governing employment contracts, working conditions, and employee rights.
Product liability law: This includes regulations governing the legal liabilities and responsibilities of manufacturers, sellers, distributors, and other parties involved in the production and sale of goods.
Intellectual property law: This includes regulations governing copyrights, patents, and trademarks.
Competition law: This includes regulations governing competition and antitrust matters to promote fair competition.
Consumer protection law: This includes regulations governing the rights of consumers, product safety, and advertising standards.
Data protection law: This includes regulations concerning the collection, use, and storage of personal data.
These regulations are enforced by various regulatory bodies and commissions, including the Australian Competition and Consumer Commission, the Australian Securities and Investments Commission, and the Office of the Australian Information Commissioner.
How card payments are regulated in Australia
The RBA regulates card payments to improve the Australian payment system and promote competition. Its reforms include capping credit card interchange fees, lifting restrictions on surcharges, removing requirements to accept debit cards, and implementing Access Regimes to reduce barriers to entry.
Do I need a licence to do business in Australia?
Yes. To operate a business in Australia, you may require licences and registrations that vary by state, local laws, and industry. Visit the Australian Business Licence and Information Service for tailored information on licences, regulations, and compliance requirements.
Payment solutions in Australia
An overview of how to accept payments from customers in Australia.
Payment gateways and providers in Australia
APEXX, a leading payment technology company headquartered in London, offers a comprehensive solution for merchants in Australia seeking to accept payments from multiple providers. Recognising the importance of accommodating diverse payment methods to meet customer preferences and enhance their overall experience, businesses may require a seamless and efficient payment processing solution.
APEXX's Payment Orchestration Layer (POL) platform is a centralised hub connecting various payment providers, including banks, acquirers, and alternative payment methods. Through APEXX POL, businesses can effortlessly manage multiple payment options via a single platform, streamlining their payment processing operations.
One of the key features of APEXX POL is its intelligent routing capability, which automatically selects the optimal payment provider for each transaction based on cost, currency, and risk assessment. This ensures businesses save on transaction fees and reduce the risk of failed payments.
Integrating APEXX POL into existing payment systems is made easy through the availability of APIs and pre-built plugins, enabling seamless integration with various e-commerce websites and point-of-sale systems.
As a trusted payment provider, APEXX is committed to delivering innovative payment solutions that meet the evolving needs of businesses in Australia and beyond. With its comprehensive payment orchestration capabilities, APEXX empowers businesses to manage multiple payment options effectively, optimise payment processing, and enhance customer satisfaction.
Cheapest payment solutions in Australia
To reduce fees in their payment stacks, merchants in Australia can implement the following strategies:
Negotiate fees: Merchants should negotiate with their payment providers for better rates, which can include transaction fees, interchange fees, and monthly fees.
Choose a suitable payment provider: Merchants should research and compare different payment providers to select the one that offers competitive rates and low fees.
Use alternative payment methods: Merchants can reduce fees by using alternative payment methods such as e-wallets or bank transfers instead of traditional card payments.
Prevent chargebacks: To avoid chargebacks and additional fees, merchants can offer clear product descriptions, prompt customer complaint resolution, and refunds when necessary.
Implement fraud prevention measures: Merchants should adopt fraud prevention measures to prevent fraudulent transactions, which can lead to chargebacks and additional fees.
Monitor payment processing fees: Merchants should keep a close eye on their payment processing fees and use payment analytics tools to track their expenses and identify areas where they can reduce costs.
Merchants can also consider using payment aggregators such as APEXX, which allow them to accept multiple payment methods through a single platform, reducing the need for multiple payment providers and lowering costs.
BNPL in Australia
Australia has experienced a massive surge in the market for buy now, pay later (BNPL) services. With BNPL, customers can divide payments for their purchases into instalments over a specific period, enabling them to use the product immediately. A credit check may not be necessary for small purchases, reducing the barriers for buyers to access products they need or want.
According to Statista, one-third of buyers in Australia used BNPL to make purchases in 2021. Experts forecast that BNPL adoption will continue, with a compound annual growth rate of 24 percent estimated from 2021-2028.
Merchants can incorporate different BNPL providers in Australia using APEXX, allowing them to offer BNPL options to customers and manage their payment systems efficiently.