Outline of Australia with its flag, coins, and stock market data in the background.
#Tech Innovation

Island insights: payments in Australia

Insights
6 Mins.

Australia is a multi-faceted, tech-leaning melting pot. Its payments landscape mirrors both its size and its diversity, with home-grown technology to meet its own unique needs. Here’s what you really need to know about the evolution of payments and banking in ‘Oz’.

For most of us, the land ‘Down Under’ is a distant place. It punches above its weight in the global imagination – think the Sydney Opera House and surfers, Nicole Kidman and Hugh Jackman, crocodiles and kangaroos. But, like Aussie Rules Football, it can be hard to make sense of (unless you’ve actually been there). As part of our Spotlight series on regional payment preferences, here are a few fast facts to get you started, with a focus on digital and electronic payments:

Australia is the world’s sixth-largest country, in terms of land area, but has only 27 million residents.1 To put that in perspective, Italy is about 4% as large as Australia, with more than twice as many people. About 73% of Australians live in the major cities, which are located on or close to the sea (with the exception of its capital, Canberra).2 What that means is concentrated pockets of urbanisation in a few places along its tens of thousands of kilometres of coastline, and a vast, sparsely populated hinterland (also known as ‘the Outback’!) everywhere else.

Kangaroos grazing on grass near a beach with ocean waves and rocky cliffs.

It is also a forward-looking and advanced tech nation, with a thriving culture of innovation, and a population that prides itself on the early adoption of new technologies. Among other things, this can be attributed to a highly educated and urbanised population, as well as a growing awareness of fraud and the need to mitigate it. Given these realities, we can isolate certain trends across the payments and banking landscape:

  • Digitalisation “I’d say that’s a huge driver in our payments space,” said James O’Sullivan, Client Engagement Manager with G+D. “It fuels innovation, but also helps banks rationalise their operations. Especially after the pandemic, there has been a concerted push to offer more services online. This is good for customers, and the banks are seeing the benefits of that as well.”
  • Fraud mitigation More services being moved online, including e-commerce, means other opportunities for fraud, pointed out James. This is a hugely important topic for banks and other financial providers. G+D supports leading Australian banks with fraud mitigation.
  • Perceptions around ESG Banks are becoming more sensitive to how they’re perceived by an increasingly aware and assertive customer base. This affects every part of a bank’s operations, from how it sends out its mailers, to who it lends money to.
  • Service and other charges “I’d say an increased focus on service charges is a major driver of what’s happening right now,” said Carlo Lacota, MD Australia and Pacific for G+D. “There are quite a lot of charges that are applied to payments at point of sale (POS), which are passed on to customers. Customers are advocating actively against these surcharges, and the government is taking notice.”

Let’s examine the Australian payments landscape, with these major trends in mind.

“Digitalisation is a huge driver in our payments space. It fuels innovation, but also helps banks rationalise their operations. This is good for customers, and the banks are seeing the benefits of that as well.“
James O’Sullivan
Client Engagement Manager, G+D

Aussies love their cards

“I expect card payments to remain sticky in the medium term,” said Carlo. The data bears him out, with the cards payment market in Australia expected to grow by 8%, hitting $701 billion in 2024.3 These payments are overwhelmingly contactless at POS (95% of in-person card transactions in 2022 were contactless).4 Debit cards made up almost 60% of the total value in 2023, with credit cards accounting for the rest.5

There is good reason for the optimism regarding the payments card market. Almost the entire population of Australia is ‘banked’, and thus has access to the financial system, including payment cards. There is an excellent POS infrastructure with strong merchant buy-in. Additionally, banks currently issue a physical debit card for new account holders. This applies to neobanks and other fintechs as well.

A bustling laneway with outdoor diners and colorful shopfronts.

There may also be cultural factors, pointed out Carlo. “There is a demographic that wants to stick to more ‘traditional’ means of payment. They may not have a smart mobile or even a mobile device, if they’re older. Or they may decide not to use their mobile device for payment, as they consider their payment cards safer.”

Personalisation is also a point of difference. A person with an affinity for green products may opt for a bank that issues cards made from recycled ocean plastics. In this way, a physical card can reflect a user’s lifestyle.

“There is a demographic that wants to stick to more ‘traditional’ means of payment. They may not have a mobile device, if they’re older. Or they may decide not to use their mobile device for payment, as they consider their payment cards safer.“
Carlo Lacota
MD Australia and Pacific, G+D

Charges ignite innovation

Given that service charges and other fees are passed on to customers in Australia, there is considerable focus on how these can be reduced.

Electronic Funds Transfer at Point of Sale (EFTPOS) is available across the nation, and is cheaper to use than the international payment schemes. As the name implies, it started off as a service at terminals. However, EFTPOS recently became available for online transactions as well, and will start to hit its stride in the e-commerce space from 2025. 

Another regulatory factor plays a significant role. “The Reserve Bank of Australia (RBA) is pushing least-cost routing (LCR) to drive down the costs merchants incur when accepting card payments,” said Carlo (see box). LCR is now becoming available for online transactions as well, following EFTPOS’s online functionality. In addition, the RBA “expects LCR to become available for mobile-wallet transactions in the future”.6

LCR automatically routes a POS transaction to the network that is cheapest at the moment, choosing between EFTPOS (which is local to Australia) and the international card schemes.

According to the Reserve Bank of Australia, “LCR is expected to bring down payment costs by 

  1. giving merchants the ability to route dual-network [cards set up to process payments through both EFTPOS and one of the international schemes] debit card transactions to the lowest-cost network, and
  2. increasing the competitive pressure between the debit card payment schemes such that there is greater incentive for all schemes to lower the fees – interchange fees and scheme fees – that they set on debit card transactions.”12

A further development is the uptake of PayID transactions, which are fast, free, and account to account (A2A). Enabled by most banks and available online, PayID is used to transfer money to an individual or other entity, using a phone number, email address, or Australian Business Number (ABN). As you don’t have to remember account numbers, routing information, and the like, it makes payments much easier and, of course, cheaper. 

Another benefit of PayID is its resistance to fraud, which is attractive to both payment providers and customers. There has been public concern over the capturing of individuals’ data for misuse in instant payment scams. A2A payments eliminate additional intermediaries and payment instruments, hence lessening the possibility of scams of this kind.

A large ocean wave with a city skyline in the background under a bright blue sky.

Wallets: optimism tinged with caution

Currently, Australians use the wallets available from the OEMs in their devices, or third-party apps, such as PayPal. Certain apps are popular in specific communities, such as WeChat Pay in the Chinese population. Bank-specific wallets are thin on the ground.

As James pointed out, proprietary wallets were hitherto best used on Android devices, which limited their appeal to users on another operating system. But a recent development in the popular Apple ecosystem is being seen as a game-changer. “Starting with iOS 18.1, developers will be able to offer NFC contactless transactions using the Secure Element from within their own apps on iPhone, separate from Apple Pay and Apple Wallet,” Apple stated recently.7

“For most banks, having your own wallet was seen as an expensive enterprise in terms of tech and investment,” explained Carlo. “Being able to roll out a wallet across both platforms makes the initial investment more attractive.” But there is still an element of wait-and-watch in the Australian banking industry, he admitted, even though he remains bullish about the future of wallets in Australia.

“For most banks, having your own wallet was seen as an expensive enterprise in terms of tech and investment. Being able to roll out a wallet across both Android and iOS makes the initial investment more attractive.“
Carlo Lacota
MD Australia and Pacific, G+D

Identity and banks go together

“Banks are fundamentally seen as custodians of people’s identity,” said James. “There is probably an evolution that’s going to happen in terms of my credentials across both payments and my identity. Will I place them with a big-data entity, or will I place them with the bank I’ve been dealing with, and am comfortable with?”

ConnectID is an interesting stage of this evolution. An initiative of Australian Payments Plus (which also runs EFTPOS), it is “a new, secure way to verify your customers’ identity. ConnectID acts as an identity exchange offering a simple and secure way for your customers to prove who they are, using an organisation they already trust. Your customers will be able to use a trusted institution, like their bank, to verify themselves and share their data directly with your business via a secure API.”8

An individual’s identity credentials would be stored by a bank (or equivalent entity), and shared to a business or other entity that is seeking to verify you. This could streamline the KYC (‘know your customer’) process, help rationalise operations dealing with verification, and potentially be a revenue source for banks as well.

“There is probably an evolution that’s going to happen in terms of my credentials across both payments and identity. Will I place them with a big-data entity, or will I place them with the bank I am comfortable with?“
James O’Sullivan
Client Engagement Manager, G+D

E-commerce: challenges and opportunities

Global events and technical innovation have helped turbocharge online business all over the world, and Australia is no exception. According to one study, the Australian online shopping market by revenue was stated to be $52.4 billion in 2023.9 With EFTPOS now available online and LCR rolled out in that space as well, we can only expect the market to strengthen. 

However, conducting business digitally comes with its own risks, with fraud a constant and growing factor. The Australian government’s statistics unit states almost 2 million people – or just under 9% of the population – suffered card fraud in the period 2022–2023, for a gross amount of $2.2 billion.10 Nor was this limited to physical usage: according to a speech by Ellis Connolly, Head of Payments Policy at the RBA, “There were 5 million fraudulent card-not-present transactions in Australia or on Australian-issued cards in 2022–2023, worth almost $700 million.”11 As Carlo pointed out, “For the first time, overseas merchant fraud has exceeded local merchant fraud.”

While still a challenge, fraud can be countered. Tokenisation is one strong response, and G+D is a leader in that particular space. Among other products we offer, Token Cockpit focuses on informing the user where their credentials are. “You can know on your phone where every one of your credentials or cards are held, and be able to make a choice on whether you should delete that token. You can even see devices that you previously owned, that still have your credentials,” said Carlo.

G+D is equally well placed to help banks navigate their way to their own wallets, given its background in developing and delivering that technology around the world. For merchants, G+D’s AUTH-U enables passwordless authentication of their customers, which boosts efficiency and productivity.

The Australian payments and banking landscape is dynamic, as befits the country itself. With its in-depth knowledge and global expertise in providing SecurityTech in different situations, G+D is well placed to help its partners navigate this huge and captivating country.

Key takeaways

  • Physical payment cards are popular, and will remain so in the medium term and long term.
  • Banks are cautiously optimistic about issuing their own wallets, with Apple’s opening up of NFC to developers in their own apps a potential game-changer.
  • The arrival of EFTPOS as an online means of payment, regulator-mandated least-cost routing (LCR) as a means of keeping merchant prices down, and the burgeoning growth of A2A payments in Australia all point to a reaction against the prevalent regime of surcharges.
  1. Population, Australian Bureau of Statistics, 2024, https://www.abs.gov.au/statistics/people/population

  2. Profile of Australia’s population, Australian Institute of Health and Welfare/Australian Government, 2024, https://www.aihw.gov.au/reports/australias-health/profile-of-australias-population

  3. Card payments in Australia to surpass $700 billion in 2024, forecasts GlobalData, GlobalData, 2024

  4. ibid.

  5. ibid.

  6. Least-cost Routing of Debit Card Transactions, Reserve Bank of Australia

  7. Developers can soon offer in‑app NFC transactions using the Secure Element, Apple, 2024

  8. About ConnectID, ConnectID

  9. Online shopping in Australia – Market Size (2009–2031), 2024, IBISWorld

  10. Personal Fraud: latest release, Australian Bureau of Statistics, 2024

  11. Online Retail Payments – Some Policy Issues, Ellis Connolly/RBA, 2024

  12. Least-cost Routing of Debit Card Transactions, Reserve Bank of Australia

Published: 04/02/2025

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