Australia is a curious market when it comes to payments. We lead the world in digital payments uptake, yet our systems lag comparable markets like Europe. While government legislation to lessen the monopolies on payments services are being introduced, consumers and businesses continue to grapple with high payment costs.
They are not happy about it but are also not yet fighting the status quo. With these conflicting forces at play, here are my top predictions of what we are likely to see in Australia’s payments landscape in 2025.
Status quo on surcharging
We will see a ban on surcharging for debit cards, but it will take an additional 12 months to come into play. While in theory it will offer welcome relief for consumers, the surcharging problem is likely to remain unchanged because the RBA at yet does not have the power to limit interchange fees, and has no visibility on card scheme fees. It also doesn’t apply to credit cards, leaving the door still open for blanket ‘card fees’ to cover all bases.
What’s likely to happen is a shuffling of how the fees are applied to side-step the debit ban. The government will need to dive further into card fees to make a real impact on the problem. But this change nonetheless also puts the onus on merchants to look for alternative payment methods that circumvent the need to surcharge. It will be on them to lead adoption and educate customers about these as a way to bring their payments costs down.
PayTo will find its niche
PayTo is Australia’s fantastic new modern payment rails. Uptake is still in the early phases but growing nicely. In 2025, PayTo will switch from a ‘wait and see’ for merchants, to a must-have on their payments road maps.
Uptake of PayTo will find its niche across enterprise retail and major billers like energy companies. These are the businesses that have the capacity to introduce it at scale and provide a clear consumer proposition like no surcharges on big ticket transactions and a secure, one-click user experience for paying bills, while making life easier on the back-end for merchants. Once these dominoes fall, it’s only a matter of time before smaller retailers also jump onboard, but they will want to see it out there first.
A year of education on account-to-account
Account to Account payment, or ‘Pay by Bank’, is virtually mainstream across Europe. As account-to-account payments in areas like bill payments increase, consumer awareness about the ease and security of Pay by Bank will grow. 2025 will be a pivotal year for providers to demonstrate how this works and why it should be standard across any checkout.
Debit cards swapped for self-serve payments
With digital wallet uptake now prolific, it’s no surprise that physical cards will start to be phased out. What will start to see in replacement is not more wallets, but the concept of ‘self-serve payments’ as part of a frictionless payment journey.
For example, Woolworths has been trialling cameras on trolleys that scan the items as they are added. Consumers will just connect their account and be debited after packing their bags. It will take years before we see this idea introduced across smaller businesses, but the big end of town is focused on building payments into the journey through a store without the need to pull out a wallet or phone.
Ben Zyl is CEO at Waave.