In 2022, a quarter of all customer payments in Australia used credit cards, while debit cards and cash accounted for 50% and 13% of transactions, respectively. As digital commerce proliferates, businesses are adapting by integrating more flexible and diverse payment methods into their business models in order to cater to customer preferences. Credit cards, of course, are high on that list.

Below, we’ll walk through the important information businesses should know if they’re planning to accept credit card payments in Australia, including how payment gateways and compliance work in the country. Here’s what you should know.

What’s in this article?

• What businesses need to know about credit cards in Australia
  
• Factors to consider when accepting credit card payments in Australia
  
• Accepting credit card payments online in Australia
  
• Challenges and considerations with credit card payments in Australia
  
• How Stripe supports credit card payments in Australia
  

What businesses need to know about credit cards in Australia

In Australia, credit card usage is supported by a mature financial services sector with a well-established institutional network. Australians have been using credit cards since 1974, and the payment method is deeply woven into their financial system. Credit cards in Australia are subject to strong regulatory standards to protect both customers and businesses, including:

• Interchange fee cap
  Banks charge other banks interchange fees for processing credit card transactions. These fees are limited to an average of 0.5% per transaction, which prevents them from becoming excessive.

• Surcharge permission
  Businesses have the option to add a small extra fee onto credit card transactions, which covers the processing costs imposed by card networks.

• No forced acceptance
  Previously, if a business accepted an issuer’s credit card, they had to accept its debit card, too. Now, a business can choose to accept one type of card and not the other.

• Expanded access
  New rules make it easier for more players to join the payment systems market, which fosters a more competitive environment.

The prevalence of credit card payments feeds into the broader digital payment system in Australia. With the rise of ecommerce and mobile transactions, credit cards have become a key part of online purchases, facilitating quick and (often) real-time payments across a variety of platforms and services.

For businesses, accepting credit card payments means providing customers with a familiar and trusted payment method. This includes physical card transactions in addition to the burgeoning sector of mobile and digital wallets, which are often linked to credit cards.

But accepting credit cards is not without its challenges. Businesses must contend with transaction fees, chargeback risks, and stringent data security standards that protect sensitive customer information. These considerations require a thoughtful strategy to balance customer convenience with operational and financial prudence.

As Australia continues to move away from a cash-dependent economy, the role of credit cards will likely evolve, especially as innovations in payment technology continue to emerge.

Factors to consider when accepting credit card payments in Australia

Setting up credit card processing in Australia means supporting your potential customers’ payment habits while meeting the needs of your business. Here are the steps for a business to set up credit card processing in Australia:

Assess transaction channels

• Determine if sales will occur in person, online, on mobile devices, or through a combination of these channels.
  

Decide on services needed

• Evaluate additional services like inventory management, loyalty programs, and reporting tools that could work in tandem with your payment system.
  

Research payment providers

• Explore different merchant service providers, including banks and independent payment processors.
  
• Look into omnichannel payment providers, such as Stripe, that offer a unified payment solution across multiple channels.
  

Compare and contrast

• Compare fees, security features, settlement times, and customer service support for various providers.
  
• Check for compatibility with your existing business systems.
  

Select a provider

• Choose a provider that fits your specific needs, whether that’s a single channel or omnichannel approach.
  
• Consider the provider’s track record in security and reliability, as well as its support for evolving payment technologies.
  

• Once you’ve selected a provider, proceed with the setup process for each payment type:

  • In person: Install EFTPOS terminals for physical stores.
    
  • Online: Integrate a payment gateway with your ecommerce platform.
    
  • Mobile: Ensure the payment system is optimized for mobile transactions.
    
  • Recurring: Set up a direct debit system for subscription-based models.
    

Choosing an omnichannel provider allows you to manage all your payment streams in a cohesive, efficient manner—a strategic advantage for most businesses.

Accepting credit card payments online in Australia

Accepting credit card payments online in Australia involves several steps, as well as considerations that will help you comply with local regulations and meet customer expectations. You’ll need to set up an appropriate payment gateway, make sure you’re complying with payment security standards, and understand the fee structures involved. Here’s a more detailed breakdown:

Setting up a payment gateway

• Choose a payment gateway provider
  Options for payment gateway providers include popular international providers such as Stripe, as well as providers used by locals in Australia, such as Eway or Afterpay. Base your selection on factors such as transaction fees, payment methods supported, and ease of use with your existing ecommerce platform.

• Integrate your payment gateway with your ecommerce platform
  Your chosen payment gateway should integrate easily into your website. Most ecommerce platforms such as Shopify, WooCommerce, or Magento have plugins or built-in support for major payment gateways.

• Merchant account considerations
  Some payment gateways require you to have a merchant account, a type of bank account that allows your business to accept credit card payments. In some cases, the payment gateway provider might offer its own merchant account services.

Compliance and security

• PCI DSS compliance
  Make sure your systems comply with the Payment Card Industry Data Security Standard (PCI DSS). This is a global, mandatory security measure to protect cardholder data. Failure to comply can result in hefty fines.

• SSL certificate
  Secure your website with a Secure Sockets Layer (SSL) certificate. This protects sensitive credit card information by encrypting data transmitted between your website and your customers.

• Fraud prevention
  Implement fraud detection and prevention tools. Many payment gateways offer services such as address verification and CVV checks to minimize the risk of fraudulent transactions.

Understanding fees and charges

• Transaction fees
  Typically, these fees are a percentage of each sale plus a fixed fee, and rates vary between payment processing providers. Factors that can influence transaction fees include your business type, transaction volume, and any risk factors you have (for fraud and chargebacks, etc.).

• Chargeback fees
  When a customer disputes a transaction and a chargeback occurs, businesses usually must pay a fee. It’s important to have a grasp on these fees and the process for handling disputes.

• Settlement periods
  Understand the time it takes for funds to be transferred from the payment gateway to your bank account. This varies between providers and can impact your cash flow.

Local considerations

• GST and tax compliance
  Confirm that your online payment system is set up to handle goods and services tax (GST) appropriately. In Australia, GST is a 10% tax on most goods and services sales, and it’s typically included in the price customers see.

• Australian Consumer Law compliance
  Familiarize yourself with the Australian Consumer Law to ensure your online sales practices are in compliance—especially regarding refunds, returns, and customer rights.

• Multicurrency support
  If you serve international customers, consider a payment gateway that supports multiple currencies and automatically handles currency conversion.

Ongoing management

• Ongoing management
  Regularly review and update your payment system. This includes keeping software up-to-date, reassessing your payment gateway provider based on evolving business needs, and monitoring transaction fees for competitiveness.

• Customer support
  Provide robust customer support for payment-related inquiries. This could include having a dedicated section on your website for payment FAQs or providing direct support channels via email or phone.

• Reporting and reconciliation
  Use the reporting tools that your payment gateway provides. Regular reporting helps in reconciling transactions, understanding sales patterns, and financial planning.

• Data analytics
  Analyze transaction data to gain insights into customer behavior, popular products, and peak sales periods. This can inform marketing strategies and business decisions.

• Marketing and promotions
  Consider how you can use your payment options to appeal to customers—for instance, by highlighting the security of your transactions.

Challenges and considerations with credit card payments in Australia

In Australia, the credit card payment environment involves specific challenges and considerations that are unique to the country’s market and regulatory framework. These include:

Regulatory environment

• Banking regulations
  Australian banks are governed by strict regulations, which can impact how credit card transactions are processed and settled. This can lead to delays or additional scrutiny for businesses, especially new or small-scale operators.

• Customer data standards
  The Consumer Data Right (CDR) in Australia mandates how customer data can be collected and used. Businesses must ensure that their credit card processing methods align with these standards, which can require additional investment in data security and compliance infrastructure.

• GST compliance
  For businesses operating in Australia, applying and remitting GST accurately is key. This requires sophisticated accounting systems for compliance and tracking.

Market characteristics

• Preference for contactless payments
  Australians have a strong preference for contactless payments, including tap to pay credit card transactions. This requires businesses to maintain up-to-date technology capable of handling such transactions efficiently.

• High penetration of credit cards
  The number of credit cards in use in Australia is estimated to reach 24 million by 2028, so businesses should be prepared to support a diverse range of credit card brands and types—each with their own fee structures and processing requirements.

• Currency conversion and international transactions
  For businesses that deal with international customers, managing currency conversion and cross-border transaction fees is important. The Australian market is particularly sensitive to these issues due to its geographic location and strong global trade ties.

Technical and infrastructural aspects

• Internet connectivity
  While Australia has widespread internet coverage, there are still areas with limited connectivity. Businesses in remote areas may face challenges in processing online credit card payments consistently.

• Ecommerce integration
  Building your payment systems into your ecommerce platforms is key. However, Australian businesses often face challenges in finding solutions that are compatible with both local and international market needs.

Customer trust and expectations

• Fraud and security concerns
  The high use of credit cards brings an increased risk of fraud. Businesses must invest in robust security measures to build customer trust.

• Customer service expectations
  Australian customers may expect high levels of customer service—including in areas related to credit card payments, such as refunds, disputes, and transaction assistance.

Competitive environment

• Dominance of major banks
  A few major banks dominate the Australian market, which can limit the options available to businesses for merchant services, and it may affect fees and terms of service.
  

How Stripe supports credit card payments in Australia

Stripe, a global online payment processing platform, provides comprehensive support for businesses that accept credit card payments from customers in Australia. Stripe’s system is designed to create a simple and secure payment experience for businesses and their customers. Here’s how Stripe facilitates credit card payments in Australia:

• Multiple payment methods
  Stripe allows Australian businesses to accept all major credit cards, including Visa, Mastercard, American Express, and more. This wide range can help businesses cater to a broader customer base.

• Local and international payments
  Stripe’s platform is equipped to handle both local and international credit card transactions, making it an ideal solution for businesses that operate domestically and globally.

• Currency conversion
  For international transactions, Stripe supports currency conversion, allowing customers to pay in their local currency while businesses receive payments in Australian dollars (or another preferred currency).

• Security and compliance
  Stripe adheres to the highest industry standards, including PCI DSS, to guarantee safe and secure transactions. This compliance is significant in protecting both business and customer data.

• Fraud detection and prevention
  Stripe uses advanced algorithms and machine learning techniques to detect and prevent fraudulent transactions. This feature is key to minimizing the risk of chargebacks and unauthorized payments.

• Easy integration
  Stripe offers a range of integration options for businesses, including prebuilt checkout pages and customizable application programming interfaces (APIs). This flexibility helps businesses create a streamlined payment experience that aligns with their website or app’s design.

• Real-time reporting and analytics
  Stripe provides real-time data and analytics, offering businesses insights into payment trends, successful and failed transactions, and customer behavior—information that can be invaluable in making informed business decisions.

Learn more about accepting credit card payments with Stripe in Australia.