Digital payment trends in Australia: What small businesses need to know

Published 11 March 2026

Table of contents

• What’s changing in Australia's digital payments?
• Which payment methods do Australians use in-store?
• Which digital payment methods are growing?
• How digital payments affect small businesses
• Get paid faster with Xero
• FAQs on digital payment trends in Australia

Key takeaways

• Australia’s digital payment landscape is evolving rapidly. Contactless payments, mobile wallets, BNPL, and account-to-account transactions are overtaking cash and competing with traditional card payments.
• Small businesses can benefit by following digital payment trends and adopting new payment technologies. New payment methods like PayTo usually have lower transaction fees, reducing your operating costs and the need to pass surcharges on to your customers.
• Modern accounting software can help your small business adapt, with features like automated bookkeeping and electronic invoicing that support emerging digital payment trends in Australia.

What’s changing in Australia's digital payments?

Digital payment trends in Australia have changed quickly in a post-Covid-19 world. Cash use has quickly declined in favour of:

• contactless POS technology like Tap to pay
• account-to-account transactions
• Buy Now Pay Later in Australia

Consumers now expect multiple fast and convenient payment options.

This means that to remain competitive, Australian businesses need to adapt to the future of payments in Australia. That means being willing to adopt new technology to the extent that it helps your business become more efficient and competitive.

Which payment methods do Australians use in stores?

Australians now prefer to use cards and mobile wallets rather than paying in cash. Contactless payments (shoppers tapping their phone or card at checkout) are now the standard. Contactless POS technology speeds up transactions and gives customers a smoother experience.

According to the Reserve Bank of Australia's (RBA’s) 2022 Consumer Payments Survey:

• 76% of payments in Australia were made with a card while just 13% used cash
• 94% of in-person card payments were contactless
• Payments using QR codes are also increasing, as QR codes help businesses and consumers avoid high card-processing transaction fees by making account-to-account transfers easier.

These statistics strongly suggest that customers value the convenience and security benefits of simply tapping a card or smartphone.

Give your customers a choice of payment methods

You’ll give your business a better chance of staying competitive if you adopt modern payment options. Think about offering your customers:

• EFTPOS, debit, and credit cards
• Tap to Pay via cards and mobile wallets
• Buy Now Pay Later (BNPL)
• QR codes

Which digital payment methods are growing?

The trend in digital payments in Australia is clear: there is strong and consistent growth in digital payments as online purchases increase. The convenience of online payment gateways in Australia is encouraging consumers and businesses to make digital transactions.

Traditional options like credit cards, EFTPOS, and debit cards remain popular thanks to widespread acceptance and rewards programs. But newer options like digital wallets, Apple Pay, PayTo, and Buy Now Pay Later, are reshaping the market.

Here's a guide to online payment gateways in Australia.

How digital payments affect small businesses

Payment providers like PayTo are changing how small businesses in Australia manage money. These digital transactions are faster, more reliable, and secure.

Businesses can benefit from these changes. For example:

• Faster transactions and a more reliable payment system mean your business receives funds much sooner.
• There’s less manual data entry, reducing errors.
• Online transactions include details like invoice numbers and customer IDs, making reconciliation within accounting software like Xero more accurate and efficient.

Overall, these changes help businesses streamline their operations and make their cash flow more predictable – making it easier to operate with tighter margins and better financial visibility.

Which fees, surcharging, and fraud trends matter

If you run a small business, you’ll need to know about the fees, surcharges, and fraud risks that come with processing transactions.

Processing fees

As part of small business fintech trends, new payment technology makes transactions fast and convenient – PayTo, for example, has lower processing fees than traditional card transactions – but they still aren’t free.

The RBA is pushing for more transparency and lower card processing costs to reduce the burden on Australian small businesses. However, as account-to-account options become more popular, businesses can look forward to lower overall processing costs. Merchant service providers set different rates, so compare your options regularly.

Payment surcharges

Currently, regulations prevent businesses from using surcharges to make a profit – a surcharge can only cover the reasonable costs of each transaction. Some Australians may even consider changing their payment method to avoid a surcharge.

But the rules on passing fees to customers with a payment surcharge may soon change: the RBA has proposed a ban on card surcharges from mid-2026. This would improve transparency for consumers but would mean businesses absorb the entire payment processing cost.

By adopting digital payment trends with lower processing fees, you can offer consumers a payment option that removes the need for a surcharge.

Fraud

While contactless POS technology tends to be safer than inserting a card, the digital payments landscape in Australia moves quickly. Payment fraud tactics continue to evolve, with scams, stolen identities, and card testing attacks on the rise alongside payment processing innovations.

To adapt to these risks and protect both their business operations and their customers, businesses need to:

• keep up with modern POS systems and online payment technology
• be proactive about payment security for small business operations

Secure account-to-account transactions require customers to authorise payments directly within their banking app or online banking portal, which adds another layer of protection.

Get paid faster with Xero

Xero gives you faster, easier ways to get paid. Pair Xero’s electronic invoicing solutions with secure, reliable payment providers to let your customers pay you straight from their invoices. And with Xero’s Tap to Pay, you can also accept contactless payments like Apple Pay and Google Pay directly through the Xero Accounting app on your mobile device.

Xero also handles the rest of your financial admin by streamlining your bookkeeping processes and simplifying your billing. That frees up time you can use to focus on growth.

Get one month free

FAQs on digital payment trends in Australia

Here are some answers to frequently asked questions that small businesses have about digital payment trends in Australia:

What is PayTo and how is it different from PayID?

PayTo and PayID are both fast, secure ways to transfer money between bank accounts. PayTo automates payments, making it ideal for companies that offer recurring subscriptions or use retainer billing models. It’s also built for merchant-style payments, whereas PayID is generally more suitable for peer-to-peer (P2P) transfers since it’s simple, payer-controlled, and requires no pre-authorisation.

Are mobile wallet surcharges allowed in Australia?

Yes – businesses can add a surcharge to mobile wallet transactions to cover the fees payment providers charge them. However, the RBA is considering a ban on all card surcharges in 2026, which would include mobile wallet surcharges.

Australians made 39% of their transactions using mobile wallets in 2024, making it one of the most popular contactless payment options in Australia. For now, there are regulations to limit surcharges to the processing cost of the payments. Businesses must also make surcharges on mobile wallet payments clear to customers before they pay.

Do BNPL fees usually cost more than card payments?

Yes – Buy Now Pay Later in Australia usually costs merchants more than standard EFTPOS, debit and credit card payments. While credit and debit card fees are typically 1–1.5% of the transaction amount, most BNPL providers charge 3–8% to cover the risk of missed instalments and the cost to manage repayment plans.

BNPL services can boost sales, especially for high-value goods and services, but the higher fees cut into your margins. So it’s a good idea to offer payment options, and lower-cost alternatives like account-to-account payments, to balance the BNPL fees.

Should I still accept cash at my business?

You don’t have to – cashless transactions in Australia are on the rise. But if consumers can’t pay without incurring a card surcharge, you need to incorporate the minimum surcharge in the displayed price.

While customers pay with cash less often than they did before Covid-19, it’s still best practice to accept it. Your customers will appreciate it and it’ll protect you against lost sales from power outages and technical issues.

How do real-time payments change my cash flow and reconciliation?

Real-time payments in Australia give businesses virtually instant access to their money while simplifying bookkeeping and reducing costs. Because transfers clear instantly, funds are available to you right away, improving your cash flow and giving you a more accurate, up-to-date view of finances.

And if you use modern accounting tools, instant payments can help simplify and speed up bank reconciliation. Transaction data can often be matched to invoices and receipts automatically, reducing manual processing, lowering operating costs, and minimising the risk of errors — freeing up your time and resources.