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54% of SMEs say scams are biggest hurdles for upgrading outdated payment tech

Stripe, a financial infrastructure platform for businesses, today published “The Future of Digital Payments for Businesses in Australia,” a joint research effort with The University of Sydney Business School (USBS). The paper finds nearly half (46%) of Australian business leaders plan to invest in digital payments in the next 12 months in order to make transactions faster or easier for customers.

The report surveyed more than 1,000 business leaders about the digital payment trends in Australia that are helping businesses improve competitiveness and thrive in an uncertain macroeconomic environment.

“Australia is no stranger to digital payment innovations—after all, we’re a nation of entrepreneurs and innovators,” said Karl Durrance, managing director of ANZ at Stripe. “While consumers are taking the lead on digital payments usage, this research confirms that there’s strong awareness amongst businesses of how important new payment technologies are. It’s encouraging to see them recognise mobile payments and tap to pay as the next frontier in digital payments for businesses in Australia.”

Nearly half of Australian businesses know their payment operations need to be upgraded

Forty-six percent of businesses surveyed are now accepting four or more payment methods, consistent with a broader trend toward businesses accepting multiple payment forms. At the same time, nearly half of Australian businesses (45%) acknowledged the need to improve their current payment systems. This has become a top-level priority at many businesses, with 40% of survey respondents reporting that investment in new payment technologies is being discussed at the executive or board level.

This high prioritisation reflects the fact that 60% of businesses report that digital payment technologies have improved their company’s competitiveness. Businesses that invested in digital payments technologies report significant improvements to customer relationships (84%), improved revenue growth (83%), and an increase in their customer base (82%).

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Medium-sized and large enterprises see the most value in adopting digital payments, with 81% stating that this technology is critical for their digital transformation trajectory, compared to only 59% of small businesses.

Late payments threaten business survival

The report also found that 50% of businesses consider late payments to be a serious threat to their survival. Solving this problem is one of the key reasons they are accelerating their transition to digital payments. Digital payments tools such as e-invoicing simplify customer payments and help businesses manage late payments through instant invoicing, integrated payment options, and increased transparency.

Victorian businesses and the retail sector are leading the way

At the state level, the report found that Victorian (VIC) businesses are at the forefront of digital wallet adoption, with 38% using payment methods such as Apple Pay and Google Pay. They are followed by businesses in New South Wales (NSW) and Queensland (QLD), which have a digital wallet adoption rate of 34%. The survey also asked business leaders about their use of online payment links, a URL, button or QR code that takes customers directly to a unique checkout page to complete a purchase. Businesses registered in NSW led with an adoption rate of 23%, followed by QLD (21%) and VIC and Western Australian (both 20%).

At an industry level, businesses in the retail and financial and insurance services sectors are leading in payment method adoption. Fifty-seven percent of businesses in retail and 49% in the finance and insurance services sector are adopting digital wallets. The top adopters of payment links are businesses in the professional, scientific, and technical services sector (36%).

Tap to pay: The next frontier for digital payments

Mobile payments have emerged as the top area of investment for digital payments technologies. Thirty-four percent of businesses plan to invest in tap to pay NFC features on mobile devices, including mobile phone-enabled payments and wearables.

They include Mr Yum, a leading mobile menu and ordering platform for the food and beverage and entertainment industries in Australia. When pubs and restaurants were forced to close their doors during the pandemic, businesses turned to providers such as Mr Yum to power their digital ordering and marketing strategy. Supported by Stripe, Mr Yum was able to scale up seamlessly. Now Mr Yum will be one of the first businesses on Stripe to offer Tap to Pay on iPhone in Australia, making ordering meals an even simpler process for its users.

More than half of businesses identify fraud and scams as their primary concern associated with payment systems

While digital payment technologies provide businesses with tremendous new opportunities, they also introduce some challenges. More than half (54%) of businesses identified fraud and scams as their primary concern when it comes to adopting new payment technologies. These concerns highlight the need for payment service providers to prioritise robust security and fraud prevention strategies to protect businesses and their customers.

“Our research shows the adoption rate of digital payments remains uneven across states, industries and different sizes of businesses,” said Dr Wei Li, Discipline of International Business at The University of Sydney Business School. “However, it’s reassuring to know businesses are planning to invest in this technology. While the progression may manifest incrementally and there are barriers to overcome, the findings show businesses are gravitating towards a more sophisticated and inclusive digital payment framework, paving the way for a transformed and resilient economic future.”

Also read: Why it’s dangerous thinking your business is too small to be hacked

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