Australian e-commerce payments are undergoing a significant transformation as consumers increasingly embrace digital payment options for online purchases. While credit and charge cards remain the leading payment method, digital wallets are gaining substantial ground and are projected to take the top position. At the same time, Buy Now, Pay Later services continue to expand rapidly, reflecting a broader shift in how Australian consumers prefer to pay both online and at the point of sale.
Australian e-commerce transactions are set to grow strongly over the next 5 years. FIS’s 2022 Global Payments Report by Worldpay shows broad growth across multiple segments in e-commerce, with digital wallets producing an especially strong projection. As Kenn Anthony Mendoza reports in IT Wire:
“Credit/charge cards remains the leading online payment method among Australians in 2021, accounting for a third (33%) of e-commerce transaction values, however, a FIS report forecasts that digital wallets will overtake to credit/charge cards to become the leading e-commerce payment method in Australia by 2025.”
Other key highlights include growth of overall e-commerce transactions and Buy Now, Pay Later options for Australian consumers::
The FIS report also highlights the following e-commerce payment trends:
• Australia’s e-commerce market is set to grow by more than half (51%) between 2021 and 2025 to US$70.7 billion in transaction value.
• In 2021, the leading online payment method was credit/charge cards which accounting 33% of transaction value, followed by digital wallets (26%), debit cards (15%) and BNPL (11%).
• Digital wallets are projected to overtake credit/charge cards to become the leading e-commerce payment method by 2024.
• BNPL is the fastest growing online payment method and projected to account for 14% of e-commerce transaction value by 2025 – trailing only New Zealand in APAC where BNPL is expected to claim 17% of online transaction value.
Outside of e-commerce activities, the report also shows a recovery in point-of-sale (POS) transactions but a sharp decline in cash purchases. For point-of-sale payment trends the FIS report found:
• POS transaction value rebounded strongly in 2021, with Australia seeing one of the largest relative expansions in APAC at 22%.
• Cash is in steep decline, and Australia is expected to have the lowest cash share in APAC in 2025 with cash accounting only 2% of POS transaction value.
Australians are not alone in abandoning cash. Mercator’s North American PaymentsInsights data indicates a reduction in cash for both U.S. and Canadian consumers as digital payment options for both on-site and online sales grow.
The projections highlight how quickly Australian e-commerce payments are evolving as consumers gain access to a wider range of digital options. Overall e-commerce transaction value is expected to increase substantially, creating opportunities for payment providers, merchants, and financial institutions to adapt their offerings to changing preferences.
Digital wallets represent one of the most significant developments. Their projected rise illustrates how convenience and an increasingly digital shopping experience are influencing consumers to move beyond traditional card-based checkout experiences. Even when cards remain the underlying funding source, wallets are changing how consumers interact with those payment credentials.
Buy Now, Pay Later is another important part of the changing landscape. Its rapid growth demonstrates consumer demand for alternatives that provide greater flexibility at checkout, particularly in a market where BNPL services have already gained significant traction.
The transformation is not limited to e-commerce. Australia’s point-of-sale market is also changing as transaction values recover while cash continues to lose share. With cash projected to represent only a small percentage of POS transaction value, merchants increasingly need to accommodate consumers who expect convenient digital payment experiences regardless of whether they are shopping online or in a physical store.
Taken together, these trends suggest that the future of Australian e-commerce payments involves more than simply shifting transactions from cash to cards. Digital wallets, BNPL, and other emerging payment experiences are creating a more diverse payments environment and changing how Australian consumers choose to pay across channels.
Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group
