It took more than 2,200 years to progress from the first precious metal coins to the first paper money, but just 22 years to go from the first credit card to the first smart watch payment.

Exponential advancement in technology and the constant pursuit of greater convenience, flexibility and security continue to shape the way we engage with commerce.

From the rise of digital wallets to the integration of Artificial Intelligence, Australians are known as early adopters of new tech and continue to embrace transformational change in our payment ecosystems.

Online shopping has become an integral part of the Aussie lifestyle, as PayPal Australia’s 2024 eCommerce Index shows 98% of Australians with internet access shop online, with 68% making at least one online purchase each week.1

During the ongoing cost-of-living crisis, more than half of Australians (55%) have turned to mobile devices as tools for real-time price comparisons while shopping in store.2 Aussies are not only using technology for the convenience of online shopping, but to make more informed and economically conscious decisions.

As payments continue to evolve, here are a few trends we can expect to see more of.

  1. Security at the forefront

As the shift toward online shopping continues at pace, security continues to be a growing concern for both consumers and financial institutions. Following recent high-profile data breaches, 74% of Australians are more worried about online safety and security than they were last year.1

Three-quarters (74%) are also concerned about making a purchase where PayPal is not available — the most preferred way for Aussie consumers to shop online (64%).2

The most significant barrier to conversion is security concerns at checkout, as cited by 67% of Aussie shoppers.1 As the payment landscape continues to evolve, it’s clear the pursuit of convenience, security and flexibility remains a guiding force in Australia’s financial ecosystem.

By embracing these transformative trends, businesses and consumers alike are propelled towards a seamless financial future where transactions blend with technology and consumer preferences shape new experiences.

2. Digital payments and digital wallet dominance

Mobile payments have transformed the way Aussies shop, allowing people to pay for goods and services easily and efficiently straight from their smart devices. According to data released by the Australian Banking Association, the number of cards registered to digital wallets in Australia increased 760% from just over 2 million in 2018 to more than 15.3 million in 2022.3 Not only do they provide a secure way to store payment information, but the driving force lies in the convenience and seamlessness they bring to the purchasing experience. As technology continues to advance, we can expect digital wallets to become even more prevalent, changing the way Aussies handle their finances.

3. Frictionless payments

Truly frictionless digital payments will progress from an impressive feature offered only by mega retailers, to table stakes for even the smallest businesses. This will be driven by necessity. Consumers say they are less likely to complete an online transaction if the checkout experience is complex with a long and confusing checkout process (51%), or if they need to create an account to purchase (39%).2 This consumer demand will force businesses towards innovative solutions that prioritise user-friendly experiences, or to lose business.

4. Social commerce payments

With the majority of Aussies active on social media, almost all Australian businesses that sell online (92%) now use social channels for marketing and promotion,2 with almost two-thirds (65%) doing this weekly, regardless of business size.2 Impressively, 32% of businesses currently selling through social channels are smaller businesses, taking advantage of these low cost, agile channels, with social delivering 10% of total sales revenue.2

From a consumer perspective, 30% of Aussies have made a purchase through social media in the past six months,1 largely driven by Gen Z (51%) versus just 13% of Boomers. Facebook is the most popular social platform for shopping (57%), followed by YouTube (44%), Instagram (42%) and TikTok (20%).1 However, Gen Z are more likely to look for their next purchase on YouTube (50%), Instagram (46%) or TikTok (39%) than they are on Facebook.1 Businesses can set up accounts on these platforms, delivering a multi-channel experience where consumers can build their own buying journey and directly purchase products.

5. AI payment technology trends

The rapid growth and influence of AI remains one of the most significant trends, with 43% of Aussies saying they would use AI to help with online shopping rising to 56% for those under 40 years old.1 Younger consumers are particularly interested in using AI to find promotions and discounts (42%) and the best prices (37%).1 This means Aussies are turning to AI not only for convenience, but as a strategic tool to reduce spending.

This year, businesses in Australia can anticipate AI playing a pivotal role in boosting customer support, software development and the expansion of friction-free payments. From speedy checkout processes with AI-powered biometrics to enhancing security through fraud detection, the applications of AI in commerce and payments are vast.

  • 1.PayPal 2024 eCommerce Index.
  • 2. PayPal 2023 eCommerce Index.

Andrew Toon is general manager of Australia for PayPal.