Shifting payments mix, rising ecommerce spending, and fee increases are shaping the Australian payments market. While regulation has introduced new competition for merchants, fees continue to rise. For example, CMSPI estimates that just three recent fee increases alone are estimated to cost Australian retailers over $40 million annually.
Australia’s Rising Cost of Payments
Shifting payments mix, rising ecommerce spending, and fee increases are shaping the Australian payments market. Three recent fee increases alone are estimated to cost Australian retailers over $40mn annually. Read below some excerpts from CMSPI’s upcoming report on the Cost of Payments in Asia Pacific, scheduled for launch August 20th.
10% 15% 20% 25% 30% 35% 40% 45%
Account-to-account (A2A) Buy now pay later (BNPL) Cash on Delivery (CoD)
0% 5% Credit card Debit card Digital wallet Others POS financing PostPay Prepaid card PrePay Figure 1. Australia Ecommerce Payments Mix (2017-2022), WorldPay Global Payments Report (2018-2023) 2017 2018 2019 2020 2021 2022
10% 15% 20% 25% 30% 35% 40% 45%
Cash Credit card Debit card
Digital wallet POS financing Prepaid card
0% 5%
2017
2018
2019
2020
2021
2022
Figure 2. Australia POS Payments Mix (2017-2022), WorldPay Global Payments Report (2018-2023)
More Digital and Less Friction: As a result of explosive growth of card payments in the period 2010-2020, Australia has become one of the most developed card markets in the world, with over 70% of online transactions and 80% of POS payments taking place on card or digital wallet. Contactless payments, wherein the consumer taps their card against a POS terminal, rose 5x between 2016-2019, and now is one of the most popular methods of transacting in-store card payments. By 2022, digital wallets were the most popular payment method for ecommerce transactions, representing 31% of spending.
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
American Express Credit
Diners Club Credit Mastercard Debit
eftpos Debit Visa Credit
Mastercard and Visa All
Mastercard Credit
Visa Debit
Rising Average Fees Across Most Networks Since 2020: Following the enforcement of the 2003 interchange caps and surcharging rights, Visa and Mastercard cost of acceptance for Australian merchants fell from 1.45% to 1.08% in just one year. While Amex was exempt from the interchange caps, Amex fees have steadily fallen from 2.51% in Q1 2003 to 1.32% in Q4 2023. By Q2 2020, when the RBA began to report on Visa and Mastercard debit and credit fees separately, the average merchant fee for those networks was 0.62%, less than half the Q1 2003 value. Over the period Q3 2020 to Q4 2023, Visa and Mastercard credit rates had the highest increase, rising by 0.09% and 0.12% respectively. In that same period, eftpos merchant fees also increased by 0.09%, with average Eftpos merchant fees sitting at 0.35% by Q4 2023.
2024 Fee Increases Expected:
$40 million annually
Across major card networks, there have been a number of network and interchange fee changes in Australia in just the last year. CMSPI estimates that just three fees introduced in 2024 are costing the Australian merchants over:
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