The rise of payment technologies has created more consistency in the ways people transact around the world, but there are still many regional distinctions around payments. Depending on your business’s key markets, you may have to navigate extensive diversity in local regulations, consumer preferences, and payment providers. Whether your business is domestic or based abroad, it’s important to understand these specific local details.
Phone payments have become one of Australia’s most popular payment methods: nearly 40% of Australian consumers made a contactless mobile payment at least once a week in 2022.
This article covers what businesses should know about accepting mobile phone payments in Australia. Below, we’ll examine many different factors, including how mobile phone payment methods intersect with consumer payment trends in Australia, how digital wallet usage is framed by the Australian regulatory landscape, and best practices that businesses can use to maximize their efforts around mobile phone payments in Australia.
What’s in this article?
- Mobile payments trends in Australia
- Popular mobile payment providers in Australia
- Benefits of accepting mobile phone payments in Australia
- How to accept mobile phone payments in Australia
- Legal and compliance considerations for payments in Australia
- Best practices for accepting mobile payments in Australia
Mobile payments trends in Australia
In Australia, like in other markets around the world, digital wallets and mobile payment methods have seen tremendous growth recently:
Shift from cash to electronic payments: In 2022, Australians made only about 13% of payments with cash, a notable decrease from 27% in 2019. This decline reflects a broader shift toward electronic payment methods.
Popularity of card payments: Card payments, including debit and credit cards, made up 76% of consumer payments in 2022, a considerable increase from 63% in 2019.
Mobile payment usage: In 2022, over one-third of in-person card payments were conducted with a phone. Nearly two-thirds of younger Australians aged 18 to 29 used mobile payments in 2022. Approximately half of those responding to a Reserve Bank of Australia survey in 2022 reported storing a payment card in a mobile wallet, indicating a growing acceptance of mobile wallet technology across different age groups.
Online payment trends: The share of payments Australians made online rose from 12% in 2019 to 18% in 2022, driven by the rise of ecommerce. COVID-19 lockdowns and social distancing further accelerated this trend. Two-thirds of respondents in 2022 made at least one online payment.
Popular mobile payment providers in Australia
A few key players dominate the mobile payment market in Australia. They include:
Apple Pay: Apple Pay allows users to store their credit and debit card information and make payments using their Apple devices, including the iPhone, iPad, and Apple Watch.
PayPal: PayPal is a global payment service provider with a sizable presence in Australia. It offers users a versatile mobile app that facilitates online and in-person payments.
Google Pay: Google Pay is designed for Android users and is compatible with devices running Lollipop 5.0 or higher. It allows users to store card information on their devices and make contactless payments.
Afterpay: Afterpay offers a buy now, pay later service, allowing users to make purchases and pay in installments. This service is integrated into a mobile app for ease of use.
Commonwealth Bank of Australia (CommBank Tap & Pay): This service is provided by one of Australia’s largest banks and allows users to make contactless payments directly from their smartphones.
Samsung Pay: Samsung Pay is a popular choice for Samsung smartphone users. It offers similar functionality to Apple Pay and Google Pay.
Fitbit Pay and Garmin Pay: These services are available on Fitbit and Garmin wearable devices, respectively. They allow users to make payments directly from their fitness trackers or smartwatches.
These providers owe their popularity to their ease of use, security features, and widespread acceptance at retailers and service providers in Australia—as well as their integration into smartphones and smartwatches.
Benefits of accepting mobile phone payments in Australia
Increased speed and convenience
In Australia, the convenience of mobile payments helps explain the growing number of transactions: in 2022, mobile payments made up 33% of all credit or debit card transactions. Businesses can process payments quickly and reduce wait times for customers. This efficiency is especially important for people who work in sales, and transport and logistics staff, who need to process payments on the go.
Better customer experience
The ability to make instant payments improves the overall customer experience. For example, charities and nonprofit organizations can easily collect donations wherever their supporters are, and businesses such as shops and market stalls can accept payments without needing expensive payment hardware.
Reduction in handling cash and physical card payments
Mobile payments reduce the need for handling cash and physical cards. Tradespeople, cleaners, and animal caregivers benefit from this by avoiding the time-consuming process of chasing unpaid invoices and the inconvenience of dealing with cash payments. A mobile payment system also supports a paperless business environment by providing digital receipts, reducing the need for printed material.
Security features associated with mobile payments
Mobile wallets in Australia typically incorporate quick ID verification processes, such as fingerprint recognition at the point of purchase. Security features such as tokenization, where the actual card data is replaced with a randomized number, biometrics and passwords for transaction verification, and fraud protection mechanisms provided by banks, can make mobile payments more secure. These features protect the business and the customer from potential fraud and data breaches.
How to accept mobile phone payments in Australia
Understanding the Australian payment landscape
Mobile payment ecosystem: Familiarize yourself with the prevalent mobile wallets such as Apple Pay, Google Pay, and Samsung Pay. Each has its own integration requirements.
Regulatory framework: The Australian Securities and Investments Commission (ASIC) regulates financial services, ensuring consumer protection and fair practices. Familiarize yourself with the relevant ASIC guidelines.
Consumer law compliance: Comply with the Australian Consumer Law (ACL) regarding transparent transactions and fair marketing practices.
Choosing a payment service provider (PSP)
Researching PSPs: Evaluate PSPs based on their support for different mobile wallets, security certifications, transaction speed, and downtime history.
Contract terms: Examine the contract for fees, chargeback policies, and termination clauses.
Data security: Confirm that the PSP adheres to global and Australian-specific data security standards.
Setting up a merchant account
Application process: This involves providing business and financial information, and possibly undergoing a financial audit.
Payment Card Industry Data Security Standard (PCI DSS) compliance: Adhere to PCI DSS guidelines, which may include completing self-assessment questionnaires and undergoing a formal audit, depending on transaction volumes.
Integrating payment technology
Point-of-sale (POS) system selection: Choose POS systems with built-in NFC technology. Some systems might require additional hardware for mobile payments.
Ecommerce integration: For online businesses, make sure the shopping cart software or platform supports mobile payments and is compatible with your PSP.
Implementing security measures
End-to-end encryption: Implement end-to-end encryption in payment processing to protect card information.
Regular software updates: Regularly update payment processing software to safeguard against new security threats.
Customer data protection: Handle customer data in compliance with Australian privacy laws.
Testing and launch
Pilot testing: In a controlled environment, conduct a pilot test of how well the payment system integrates with your existing setup.
Customer feedback during pilot: Collect customer feedback during the pilot phase to identify any pain points in the payment process.
Ongoing compliance and reporting
Audit schedules: Establish a schedule for regular internal and external audits to guarantee ongoing compliance with relevant standards.
Financial reporting: Maintain accurate records for all transactions to simplify financial reporting and tax compliance.
Local considerations
Bank partnerships: Establish partnerships with local banks that are well-integrated with popular mobile payment platforms.
Cultural adaptation: Be aware of local payment trends and preferences, which can vary from region to region in Australia.
Legal and compliance considerations for payments in Australia
When setting up and managing payment systems in Australia, businesses must adhere to a strict set of legal and compliance considerations. Here’s a detailed overview that focuses on relevant laws and regulations, data security and privacy, and compliance with Australian Consumer Law:
Overview of relevant Australian laws and regulations
Australian Securities and Investments Commission (ASIC): ASIC regulates financial services and products to ensure fair, transparent, and efficient markets. Businesses must comply with ASIC’s rules regarding financial services, including those related to payments.
Banking Act 1959: This act governs the regulation of banks, and the Australian Prudential Regulation Authority (APRA) oversees its enforcement. It includes provisions relevant to payment processing and the security of financial transactions.
Payment Systems (Regulation) Act 1998: Administered by the Reserve Bank of Australia, this act regulates payment systems in Australia and covers aspects like efficiency and risk management in payment systems.
Anti-Money Laundering and Counter-Terrorism Financing Act 2006: Requires businesses to implement processes to prevent money laundering and terrorism financing, including Know Your Customer (KYC) procedures.
Data security and privacy considerations
Privacy Act 1988: This act includes the Australian Privacy Principles (APPs) that set standards for how to handle personal information. Businesses that handle payment data must have a privacy policy in place, request customer consent for data collection, and take reasonable steps to protect personal information from misuse, interference, loss, unauthorized access, modification, or disclosure.
PCI DSS: PCI DSS is a global standard for data security around card payments. Compliance is mandatory for any businesses handling card transactions.
Notifiable data breaches (NDB) scheme: This system, established under the Privacy Act, requires businesses to notify individuals and the Office of the Australian Information Commissioner about any data breach that is likely to result in serious harm.
Compliance with ACL
Fair trading: Under the ACL, businesses must not mislead or deceive customers with any practices. This means there must be clear disclosure of any fees or charges associated with payments.
Consumer rights: ACL guarantees consumer rights when buying goods and services, which include rights to refunds, repairs, and replacements in certain scenarios. Businesses’ payment and refund policies must comply with these rights.
Product and service descriptions: ACL requires that descriptions of products and services, including any representations made about payment terms, are accurate and not misleading.
Best practices for accepting mobile payments in Australia
Comprehensive compliance strategy
Adherence to regulations: Businesses must stay updated with ASIC guidelines, the Privacy Act, and the Payment Systems Regulation Act, ensuring all payment processes comply with these regulations. Every business should have regularly scheduled compliance reviews and audits.
Compliance with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations: Develop and maintain an AML and CTF program. This includes regular staff training, customer due diligence, and monitoring transactions to identify and report suspicious activities.
PCI DSS alignment: Conduct regular PCI DSS audits and network scans and put stringent data security measures in place to protect cardholder data.
Advanced data security measures
End-to-end encryption: Use state-of-the-art encryption protocols for all transactions to protect data from the point of sale to the processing network and ensure no unencrypted data is exposed.
Tokenization: Employ tokenization technology to replace sensitive payment details with unique identification symbols, securing customer data during transactions and storage.
Regular security assessments: Conduct frequent and thorough security assessments, including vulnerability scans and penetration testing, to proactively identify and rectify potential security weaknesses.
Consumer rights and protections
Transparent pricing: Clearly communicate any additional fees or charges associated with mobile payments so customers are fully informed before they complete a transaction.
Fair refund policy: Establish a clear, fair, and easily accessible refund policy that complies with the ACL, with a particular focus on the conditions and processes for returns, exchanges, and refunds.
Enhanced user experience
Seamless integration: Optimize the integration of mobile payment systems to provide a smooth payment experience for customers, increasing the overall speed and convenience of transactions.
Diverse payment options: Offer a range of mobile payment options, including popular platforms like Apple Pay, Google Pay, and Samsung Pay, to cater to a variety of consumer preferences.
User education: Provide comprehensive information and support to customers regarding the use of mobile payments, including tutorials, FAQs, and in-store assistance, to encourage adoption and ease of use.
Strategic partnerships
Bank collaborations: Partner with Australian banks that are active participants in the mobile payments ecosystem.
Technology partners: Collaborate with leading technology providers that specialize in innovative payment solutions and security.
Continuous monitoring and feedback
Real-time transaction monitoring: Employ systems that allow you to monitor transactions in real time and immediately identify and respond to fraudulent activities or unusual patterns.
Customer feedback loop: Regularly gather and analyze customer feedback about the mobile payment process and use this data to refine and improve the payment experience.
Sustainability and future readiness
Eco-friendly practices: Incorporate sustainable practices, like digital receipts, into your payment processing to reduce waste and show customers you are environmentally conscious.
Innovation and adaptability: Stay abreast of emerging trends and technologies in mobile payments.
Inclusivity and accessibility
Accessibility features: Incorporate features that make mobile payment systems accessible to individuals with disabilities, such as screen reader compatibility and easy-to-navigate interfaces.
Multilingual support: Provide support and resources in multiple languages to accommodate Australia’s diverse population.
Legal and financial documentation
Record keeping: Maintain meticulous digital records of all transactions for compliance, auditing, and tax purposes.
Data breach protocols: Establish and regularly update a clear response plan for potential data breaches, in accordance with the notifiable data breaches scheme, including steps for notification and remediation.