Four payment trends Australian businesses are prioritising in 2024

The emergence of platform business models, such as marketplaces and Software-as-a-Service (SaaS), has already revolutionised the business landscape, particularly for enterprises servicing small to midsize businesses (SMBs). In response to the demand for streamlined processes, platforms are now integrating payment solutions directly into their services, unlocking hidden value via new revenue streams and increased customer loyalty.

Research conducted in partnership with Boston Consulting Group finds that 59% of SMBs in Australia are interested in financial services embedded within a platform, and 90% of SMBs interested in funding solutions state they would benefit from their business loans being pre-approved.

“We’ve learned that providing a one-stop solution makes our core SaaS products stickier, and enables merchants to simplify their operations, scale for growth, and provide exceptional customer experiences,” says Jona Georgiou, General Manager of Payments for leading commerce platform, Lightspeed.

As local businesses embrace embedded payments for platforms, they are opening the door to increased operational efficiency, reduced costs, faster payouts, and a more seamless payment experience for their customers.

Embedded financial solutions present a growing opportunity to better meet users' needs while unlocking new revenue streams through charging fees for processing transactions and business financing. The integration of payments into the fabric of business processes is a strategic move that can ensure platforms stay ahead of the curve and deliver unparalleled value to their users.“No one understands SMBs better than our platform merchants, and we’re proud to help them offer more value embedded in their ecosystem by using Adyen – from processing payments to facilitating funding for their users,” says Hayley Fisher, Country Manager, Australia and New Zealand, Adyen.

The advent of portable in-person payment devices, including those compatible with Android and Apple systems, is reshaping in-store transactions – and not a moment too soon. New perceptions of the ideal shopping experience, sparked during the pandemic, are having a significant impact on consumer behaviour and checkout expectations. The Adyen Retail Report shows that 62% of Australian shoppers are prepared to leave a store if they can’t checkout using their preferred payment method, higher than the global average of 55%.

Mobile payment devices offer businesses enhanced flexibility and operational efficiency, allowing for customisation within existing systems. Queue-busting benefits are also attractive: the ability to provide a range of services – from refunds, to endless aisle, to appointment booking – anywhere in store transforms checkout processes. Our research shows that over 1 in 3 Aussie shoppers said they were happy with the technology because it made shopping faster, and one in five said technology made shopping in-store more fun.

Portable payment terminals are eliminating the need for traditional cashier stations, prompting businesses to rethink their store layouts. The result is dynamic and interactive spaces that prioritise engaging, customer-centric experiences over static payment points. Iconic Australian footwear brand R.M. Williams effectively blurs the digital and physical to elevate the checkout process to a memorable, sophisticated experience with a unified commerce solution. This shift towards physical stores as “experience centres” is evident across APAC as businesses leverage these devices to create a more immersive shopping environment.

“The integration means we can deliver a unified omnichannel experience and provide a smoother checkout process in-store with mobile checkout and endless aisle capabilities,” says Nathan Alexander, CTO, R.M. Williams.

“It also means we can extend digital into physical retail by connecting our in-store systems to our online ecosystem. This will allow us to leverage Adyen’s Unified Commerce payments data to get a full understanding of our customers’ shopping behaviours and actionable insights.”

Research from the Reserve Bank of Australia (RBA) shows that consumers are increasingly moving away from physical card payments to mobile or digital wallet transactions. Contactless card payments made up 95% of in-person card transactions in 2022. This underscores the importance of creating seamless in-person payment experiences. R.M. Williams has utilised Adyen's new Tap to Pay on iPhone solution, an exciting innovation in partnership with NewStore, to stay ahead of these evolving consumer preferences.

“As a customer-first brand, we are excited to be one of the first major retailers in Australia to roll out Tap to Pay on iPhone as it will make that checkout experience even easier for both our store team and our customers, said Peter Ratcliffe, Head of Technology, R.M. Williams. “Instead of forcing shoppers to line up at the counter, our store team members can assist and checkout customers simultaneously anywhere on the floor.”

A shift in the use of payments data is emerging as a key driver for success. This represents a strategic move to empower businesses to independently harness the power of their data rather than relying solely on external sources.

Australian customers have become more price-conscious in response to stubborn inflation, spending more time finding the best deals, and expecting to be better-rewarded for brand loyalty through more personalised experiences and promotional offers. Our research found that last year, 36% of consumers in APAC opted to wait for big-ticket sale events, such as Black Friday or the year-end holiday season. In Australia, 59% of businesses reported an increase in customer expectations because of the cost-of-living squeeze.

Consumers are also keen to engage more with the brands they buy from – especially when there’s a customised experience on the table. Yet despite this growing consumer sentiment, just 22% of Australian businesses have a loyalty program that considers a customer's online and offline transactions.

There is an opportunity for brands to win over customers and generate loyalty by connecting online and offline channels to facilitate a more data-driven, personalised shopping experience. Our research has highlighted the growing trend of businesses linking in-store and online transactions to customer profiles, enabling the strategic use of first-party payments data. This secure, data-centric approach is becoming a cornerstone for revenue growth and marketing strategies, offering businesses the ability to create more targeted marketing campaigns and personalised promotions that truly resonate with their audience.

Tokenisation – securely swapping out sensitive customer card information with safe, non-sensitive data for subsequent purchases – is emerging as a key player in the Australian payment landscape for 2024. At Adyen, we’ve seen a fast adoption of the technology with 2 billion active network tokens on our platform to date.

With card networks and issuers updating systems to start using network tokens, tokenisation technology is constantly evolving to improve customer experience and business benefits. The industry is looking to ultimately eliminate Primary Account Numbers (PANs) from the payment flow, replacing credit card numbers with secure tokens.

The push towards card-not-present (CNP) methods is set to gain momentum in 2024, with issuers actively supporting the adoption of this convenient and secure payment option. Eftpos tokenisation is set to be a significant development in this area in 2024, contributing to the overall diversification of payment methods in a country where card usage remains popular. By the end of fiscal year 2022, for example, Visa provisioned more than four billion network tokens, surpassing the number of physical cards in circulation, and almost doubling from 2021.

In addition, recent fraud incidents impacting leading Australian retailers have prompted businesses to intensify their focus on security and fraud prevention.Businesses can benefit from these developments by way of more cost-effective and secure payments routing, uninterrupted billing for customers, and less work and administration tasks, like dunning, for backend operations.

This is especially compelling for digital and subscription model businesses. In addition, because of the built-in security, issuers trust network tokens, so the likelihood of an accepted payment is higher when a network token is used.When leveraging tokenisation, keep in mind you’ll need intelligent technology that knows when to use a token versus a PAN. Adyen’s machine learning knows when to use network tokens and, if needed, can automatically switch to the PAN to ensure the authorisation of legitimate customers.

The fusion of technology and strategic insights is set to propel businesses into a new era of commerce, where the seamless integration of payments with memorable experiences becomes the cornerstone of success in the dynamic markets of the region. As you prepare to navigate the complexities of 2024, ensure your payment strategy is striking the right balance between key trends and long-term growth goals.

Look for opportunities to optimise your setup to improve operational efficiency, create immersive shopping experiences, and build lasting customer loyalty for years to come – there are always more than you think. The key is setting yourself up with a strong payments provider that can do most of the legwork on your behalf. If you choose to partner with Adyen, you’ll have a powerful engine behind you that’s always evolving, ensuring your business is always ready for the latest opportunities.