Australia has rapidly moved toward a cashless economy. Whether you’re paying for your morning coffee with a tap, ordering online from your phone, or splitting dinner via a payment app, digital payments are now part of everyday life. For businesses, this shift is the new reality of commerce.
But what exactly are digital payments? How do they work? And most importantly, what are the benefits and challenges for businesses? Let’s break it down.
What Are Digital Payments?
In simple terms, digital payments are transactions made without physical cash or cheques. Instead, they rely on electronic systems and networks to transfer money between customers and businesses.
Some common examples you’ll already know include:
- Tap-and-go payments with a debit or credit card
- Mobile wallets such as Apple Pay, Google Pay, or Samsung Pay
- Online checkouts using cards, PayPal, or Buy Now, Pay Later (BNPL)
- Bank transfers made through PayID or online banking apps
Compared to cash, these methods are faster, more secure, and increasingly expected by customers. Businesses that don’t offer digital payment options often find themselves at a disadvantage, as consumers may choose a competitor with more convenience.
How Digital Payments Work
Although digital payments may feel instantaneous, several steps take place behind the scenes. Here’s a simplified look at the process:
- Initiation – A customer taps a card, scans a QR code, or submits payment details online.
- Data Transmission – The payment information is securely sent through a payment gateway or network.
- Authorisation – The customer’s bank checks the account for available funds and either approves or declines the transaction.
- Settlement – Once approved, the funds are transferred to the merchant’s account. Depending on the provider, settlement can be instant, next business day, or a few days later.
To illustrate, imagine a customer buying lunch with a tap card:
- The card communicates wirelessly with the terminal.
- The terminal routes the payment through the EFTPOS network.
- The issuing bank confirms funds are available.
- Approval appears on the terminal within seconds.
- The merchant receives the funds in their account, often the next day.
This combination of encryption, network checks, and settlement cycles ensures payments are quick and reliable.
Types of Digital Payment Methods
Digital payments aren’t a single category—they include several methods. Understanding the main types helps businesses choose which to offer:
| Payment Method | Examples | Where It’s Commonly Used | Key Benefits |
| Credit/Debit Cards | Visa, Mastercard, eftpos | Retail, hospitality, online shopping | Universally accepted, fast, secure |
| Mobile Wallets | Apple Pay, Google Pay, Samsung Pay | In-store tap payments, in-app purchases | Convenience, added security via biometrics |
| Bank Transfers | PayID, OSKO, direct deposit | B2B, high-value purchases, service industries | Low fees, instant transfers with PayID |
| Buy Now, Pay Later (BNPL) | Afterpay, Zip, Klarna | E-commerce, fashion, retail | Increases sales by offering instalments |
| Recurring Payments | Direct debit, subscription billing | Gyms, SaaS, memberships | Automates regular revenue collection |
| Emerging Options | Cryptocurrency, QR-based wallets | Niche online stores, international payments | Differentiation, potential low-cost transfers |
By offering a mix of methods, businesses can appeal to a broader customer base while improving convenience and trust.
Benefits of Digital Payments for Businesses
Switching to digital payments can deliver real business advantages to brick-and-mortar businesses:
1. Faster Transactions
Tap-and-go or mobile wallet payments process within seconds, reducing queues and keeping customers moving.
2. Increased Customer Convenience
Consumers now expect to pay digitally. Offering multiple payment options means fewer lost sales.
3. Enhanced Security
Encryption and fraud-detection systems protect both customers and merchants, reducing risks compared to handling large amounts of cash.
4. Better Cash Flow Management
With daily settlements, businesses have predictable access to funds. Some providers, including Venue Smart, even settle seven days a week.
5. Easier Record-Keeping
Digital transactions automatically feed into reports and accounting systems, making tax time less stressful.
6. Growth Opportunities
Businesses with digital payment solutions can expand online, run multiple terminals, or accept international customers more easily.
Challenges and Considerations
While digital payments provide speed and convenience, there are still some challenges businesses should be aware of:
- Transaction Fees – Every payment provider charges a fee, usually a percentage of the transaction or a flat fee. For small margins, these costs can add up.
- Connectivity – EFTPOS and mobile wallet payments depend on WiFi or 4G. Outages can temporarily stop transactions unless there’s a backup solution.
- Fraud Risks – Although fraud detection is improving, online transactions remain a target for cybercrime. This makes encryption, tokenisation, and secure platforms essential.
- Customer Preferences – Not everyone is ready to go completely cashless. Offering a mix of payment methods ensures you don’t exclude certain customers.
Understanding these considerations allows businesses to weigh up benefits against costs and choose providers that deliver reliability and security.
What About Online Store Payments?
When it comes to online transactions, two terms often appear: online payment gateways and payment orchestration platforms. While they sound similar, they serve different purposes in the payment ecosystem.
Online Payment Gateways
An online payment gateway is essentially the bridge between your website or app and the customer’s bank. It captures payment information, encrypts it, and securely transmits it to the acquiring bank for authorisation. Without a gateway, businesses wouldn’t be able to process card payments or digital wallet transactions online. Key features usually include fraud screening, tokenisation for recurring billing, and integration with e-commerce platforms such as Shopify, WooCommerce, or Magento.
Payment Orchestration Platforms
A payment orchestration platform sits one layer higher. Instead of connecting to a single gateway, it integrates multiple gateways, payment methods, and acquirers into a single hub. This allows businesses to:
- Route transactions dynamically (for example, sending high-value payments through the lowest-cost provider).
- Offer customers more choice by supporting multiple digital wallets, BNPL providers, or regional payment methods.
- Reduce downtime with failover options if one gateway is offline.
- Centralise reporting across online, in-store, and cross-border payments.
For smaller businesses, a single gateway is usually sufficient. But as transaction volumes increase—or if you operate across multiple regions—payment orchestration can reduce costs, increase flexibility, and improve the customer experience.
Learn More About Payment Acceptance
Digital payments are now an essential part of doing business in Australia. Customers expect fast, flexible, and secure ways to pay, whether that’s a quick tap at the counter or a seamless online checkout.
At Venue Smart, we believe choosing the right payment mix shouldn’t be complicated. That’s why we focus on transparent pricing, no lock-in contracts, and flexible solutions that adapt to your needs.
By taking the complexity out of payments, we give you clarity and control so you can focus on running and growing your business. The shift to digital is only accelerating, and with the right solution in place, you’ll be ready to thrive in a cashless future.