Predictions for Australia's payments landscape by 2025

Ben Zyl, Chief Executive Officer at Waave, has shared his insights and predictions for Australia's payments landscape in 2025, addressing issues such as surcharging, the adoption of PayTo, and consumer payment experiences.

Australia remains a notable market in the realm of payments, leading in digital payment adoption worldwide despite lagging behind European systems. Zyl points out that while government measures to dismantle monopolistic practices in payment services are underway, high payment costs continue challenging consumers and businesses. Although dissatisfaction with the status quo exists, large-scale action has yet to materialise.

According to Zyl, surcharging will undergo significant changes with a predicted ban on surcharging debit card transactions, a measure expected to be enacted by 2025 but delayed by an additional twelve months for implementation. Zyl explains, "While in theory, it will offer welcome relief for consumers, the surcharging problem is likely to remain unchanged because the RBA does not yet have the power to limit interchange fees and has no visibility on card scheme fees."

This legislative change does not extend to credit cards, enabling broad 'card fees' to persist as a workaround and necessitating deeper governmental intervention in card fees. This change requires merchants to explore alternative payment methods and educate consumers as a strategy to reduce surcharging needs.

PayTo, described as "Australia's fantastic new modern payment rails" by Zyl, is predicted to become essential for merchants' payment strategies by 2025. The system's integration is especially anticipated amongst enterprise retailers and major billers, including energy companies. These entities can effectively scale and offer benefits such as no surcharges on large transactions, secure one-click bill payments, and simplified backend management for merchants. Zyl believes, "It's only a matter of time before smaller retailers also jump onboard, but they will want to see it out there first."

Another anticipated development is the rise of account-to-account payments or "Pay by Bank" becoming largely mainstream. 2025 will be a critical year for providers to educate consumers on their ease and security. Zyl remarks on the growing familiarity with this payment method in Europe and foresees increased consumer awareness, boosting its adoption in Australia, particularly in bill payments.

The transition from physical debit cards to self-serve payments is expected, driven by the widespread adoption of digital wallets. Instead of an increase in digital wallets, Zyl predicts a shift toward "self-serve payments", creating a seamless payment process. Illustrating this trend, trials are currently underway using technology such as cameras on shopping trolleys to automatically scan and bill items, eliminating the need to remove a wallet or phone. Although this transformation may take years to reach smaller businesses, the focus remains on integrating payments into the overall shopping experience within larger retailers.