Australian businesses primarily rely on traditional payment methods but a growing percentage are embracing mobile digital wallets and tap-to-pay features, a new business survey has found, as concerns about fraud and scams drive them to more secure options.

Fully 54 percent of 1,015 Australian business leaders surveyed in a University of Sydney Business School-Stripe study, named fraud and scams as their primary concerns when evaluating payment systems – well ahead of cost (12 per cent), compliance issues and technical glitches (9 per cent), and a lack of customer trust in the systems (7 per cent).

New Australian Payments Network (APN) figures suggest their fears are well-placed, with payment-card fraud increasing 16.5 per cent between 2021 and 2022 to be worth $577 million – equivalent to 57.5 cents per $1,000 spent.

That was down from 75 cents per $1,000 spent in 2017, APN noted, largely due to the 2019 introduction of the industrywide card-not-present Fraud Mitigation Framework (CNP Framework) – which forces merchants to improve customer authentication and security practices if they are found to have unusually high fraud rates.

Use of data analytics and AI to spot potentially fraudulent transactions has made digital payments particularly attractive as merchants expand online and overseas, enabling merchants like ecommerce operator Sendle to dramatically improve their fraud detection.

After it moved into the US market, ecommerce operator Sendle saw a surge in fraudulent activity but was able to tap Stripe’s fraud prevention tools to reduce fraud losses by 30 per cent.

“The ability to utilise the product without any technical expertise was a game-changer,” Sendle’s former global head of fraud Zway Yee said, “especially since we lacked dedicated fraud teams at that time.”

Cashing in on digital payments innovation

By tapping payment providers’ fraud detection and analytics capabilities, merchants adopting digital payments get an unprecedented view of their business – but that’s only part of the reason 46 per cent of respondents said they intend to invest in new digital payment technologies over the next 12 months.

Fully 34 per cent will implement tap-to-pay features – which allow merchants to accept payments on their smartphones without requiring additional payment terminals – while 23 percent expect to add online payment links and digital wallets such as Apple Pay, Google Pay, and AliPay.

Other planned technologies include buy now, pay later solutions (18 per cent), scanning codes to pay on mobile devices (17 per cent), and cryptocurrencies or blockchain based solutions – which are currently used by just 5 per cent of respondents, but on the cards for 16 per cent of merchants despite recent wild undulations in cryptocurrencies’ value and stability.

Growing appreciation of digital payment solutions is a significant change in a country that, despite its plans to abandon cash, is still dominated by cash, bank transfers and direct debits – and has long lagged other regional economies in adopting mobile payments.

Most businesses, the report notes, are “often managing a diverse array of payment methods simultaneously”, with the most aggressive adopters of new payment platforms include retailers, finance and insurance services providers, and the half of respondents who see e-invoicing and digital payments as helping reduce the significant impact of late payments.

Indeed, cashflow benefits had led to digital payment methods being discussed at the executive and board level within 40 per cent of responding companies, with 45 per cent agreeing that their current payments strategy needs to be upgraded.

Those that had transitioned to digital payments were broadly positive about the technologies, with 83 per cent of respondents reporting increased revenue and 74 per cent saying that digital payment systems had helped them expand into new markets.

“Australia is no stranger to digital payment innovations,” said Stripe ANZ managing director Karl Durrance. “While consumers are taking the lead on digital payments usage, there’s strong awareness amongst businesses of how important new payment technologies are.”