A new eCommerce Payments Experience Report from Power Retail reveals a seismic shift in how Australians shop, with Gen Z leading the charge in Flexible Payment Options (FPOs) like Buy Now, Pay Later (BNPL). This trend isn’t just changing consumer habits—it’s also reshaping the way businesses, particularly SMEs, engage with younger shoppers.
The report shows that 1 in 3 Australians now use FPOs almost as frequently as traditional payment methods such as BPay and bank transfers. With 40% of Australians having used an FPO in the past six months, small businesses targeting younger demographics must adapt or risk losing sales to more flexible competitors.
Key Consumer Trends
- 18-34-year-olds are the biggest adopters of BNPL and similar services.
- 79% of FPO purchases are discretionary, primarily in fashion, electronics, and beauty—suggesting that flexible payments are driving non-essential spending.
- Other industries are lagging behind, presenting an untapped opportunity for businesses outside traditional retail.
What This Means for Australian SMEs
For small businesses, particularly those selling online, this growing reliance on FPOs means adapting payment strategies to meet consumer expectations. With Gen Z more willing to spend on wants rather than needs, businesses that integrate flexible payments can increase basket sizes and customer loyalty.
“We’re seeing an evolution in how Australians spend, and small businesses need to take note,” says Power Retail’s CEO. “Gen Z and Millennials expect frictionless, flexible payment options, and businesses that fail to offer them could be left behind.”
Opportunities for SMEs
- Adopt BNPL and FPOs – Businesses that integrate these options can reduce cart abandonment and increase conversion rates, especially for younger buyers.
- Expand BNPL into new industries – While retail dominates, sectors like travel, hospitality, and services have an opportunity to attract younger consumers by offering flexible payment plans.
- Market BNPL strategically – Highlighting flexible payments in promotions or during checkout can encourage impulse purchases and larger order values.
The Long-Term Shift in Consumer Behaviour
While BNPL has been criticised for encouraging overspending, its growing popularity suggests it’s here to stay. The question for businesses is how to balance consumer demand for flexibility with financial sustainability.
“SMEs that embrace FPOs now will be better positioned for the future,” says Power Retail. “Younger consumers are driving this shift, and businesses that adapt will be the ones capturing their loyalty.”
As flexible payments continue to reshape spending habits, Australian SMEs have a unique opportunity to attract, engage, and retain Gen Z consumers—but only if they move fast enough to meet evolving expectations.
