Popular Payment Gateways for Australian E-commerce

A payment gateway is one of the most critical components of your online store—it connects your website to your customer’s preferred payment method and ensures you get paid quickly and securely. In Australia, especially for South Australian businesses using Xero, the most commonly used and reliable payment gateways include:

• Stripe – Known for its seamless integration with platforms like Shopify and WooCommerce, Stripe allows customers to pay directly with credit or debit cards (Visa, Mastercard, Amex), Apple Pay, and Google Pay without leaving your site. It's widely used for its transparency, low fees, and great developer support.
• PayPal – Trusted globally, PayPal gives customers the ability to pay via PayPal balance, credit card, or linked bank account. While it redirects customers to a PayPal login page before returning to your site, many buyers prefer it for its buyer protection and familiarity.
• Square – Offers both in-person and online payment solutions, making it great for retailers who operate both online and offline. Their payment gateway works well with Square's POS system and integrates smoothly with e-commerce setups.
• Afterpay – A popular Buy Now, Pay Later (BNPL) service in Australia. Customers can split purchases into four interest-free payments, while you (the merchant) receive the full payment upfront. It appeals especially to younger customers and can boost conversion rates.
• eWAY and Pin Payments – Australian-based options with strong support for Xero integration. Great for those who prefer local providers or need alternatives to Stripe and PayPal.

Many e-commerce platforms such as Shopify, BigCommerce, Wix, and WooCommerce have prebuilt integrations with these gateways, making setup quick and relatively painless.

Fee Structures: What You Need to Consider

Payment gateway fees typically follow a structure of a percentage of the sale amount plus a flat fee per transaction. Here's a rough breakdown of common fee structures (accurate as of 2024):

• Stripe: ~1.75% + 30c for domestic cards; ~2.9% + 30c for international cards
• PayPal: ~2.6% + 30c for domestic; up to 3.6% for international payments
• Square: ~2.2% + 30c per online transaction
• Afterpay: ~4% to 6% + 30c per transaction (depending on volume)
• eWAY: ~1.75% + 25c per transaction

These fees can add up, especially if you’re selling low-cost items. BNPL options like Afterpay carry significantly higher fees due to the credit risk they assume. However, many businesses find that offering BNPL options results in higher average cart values and increased sales.

Some gateways also charge:

• Currency conversion fees for overseas customers
• Chargeback fees (if a customer disputes a transaction)
• Monthly account or setup fees (rare with modern platforms)

Always read the fine print and compare not only the cost but also support, features, and integration capabilities.

Customer Convenience and Conversion

Offering multiple payment options gives customers choice, which can directly affect your conversion rates. If a customer doesn’t see their preferred method at checkout, they’re more likely to abandon the cart.

• PayPal users value the speed and security of not entering card details.
• Stripe and Square allow in-site payments, which speeds up checkout and avoids cart abandonment caused by redirection.
• Afterpay appeals to younger demographics and can drive impulse purchases.

Mobile-friendliness is also vital—most customers shop on their phones. Enabling mobile wallets like Apple Pay and Google Pay can lead to faster checkouts and fewer drop-offs.

Including payment method logos (Visa, PayPal, Afterpay) and SSL security badges on your checkout page builds trust and shows customers your site is safe and reputable.

Security and Fraud Prevention

Security is paramount when handling online payments. Fortunately, major payment gateways handle most of the security and fraud prevention for you. This includes:

• PCI DSS compliance (you don’t store card info yourself)
• Encrypted transaction processing
• AI-based fraud detection (e.g. Stripe Radar)
• 3D Secure (adds verification steps for risky payments)

Chargebacks can still occur—when a customer disputes a charge, the gateway may debit your account and initiate an investigation. Common causes are unauthorised transactions or unrecognised billing names. Having clear product descriptions, fast shipping, and accessible customer support can help reduce chargebacks.

Some gateways (like PayPal) offer Seller Protection, but only for eligible transactions, usually involving physical goods with proof of delivery. It's crucial to understand your gateway’s policies and ensure your order fulfilment process is watertight.

Integration with Your Accounting Software (Xero)

For Australian e-commerce businesses using Xero, integration with your payment gateway is critical to saving time and ensuring accurate BAS lodgements. Here’s how the major ones integrate:

• Stripe: Connects directly to Xero. Automatically reconciles payouts, records sales and fees, and can be set to match invoices. Third-party apps like Amaka or Synder can sync itemised transactions for detailed reporting.
• PayPal: Xero has built-in PayPal feeds. Transactions are pulled into Xero daily and can be reconciled against invoices or sales. You can also set up PayPal as a payment method for online invoices in Xero.
• Square: Integrated via apps like Amaka or Square's own Xero plugin. Summarised daily sales are sent to Xero, including breakdowns of income, taxes, and fees.
• Afterpay: Doesn’t have a native Xero feed. Typically managed using a clearing account in Xero, where you record the gross sale, Afterpay fee, and net payout. This requires a bit of setup but is easily managed once the process is in place.
• eWAY / Pin Payments: Use direct bank feeds or third-party apps to connect with Xero. Some integrations offer detailed line-item breakdowns; others summarise daily or weekly transactions.

By connecting your gateway to Xero, you:

• Avoid manual entry of sales and fees
• Ensure accurate GST reporting for BAS
• Save hours during tax time
• Maintain cleaner, more reliable financial reports

If you’re selling across multiple platforms or using marketplaces (like eBay or Etsy), tools like A2X, Dext Commerce, or Link My Books can consolidate payments and sync with Xero efficiently.

Final Word

Your payment gateway isn’t just about how you get paid—it affects customer trust, your profit margins, your cash flow, and your bookkeeping processes.

The best approach is to:

• Choose 1–2 core gateways (e.g. Stripe + PayPal or Square + Afterpay)
• Ensure your checkout is mobile-friendly and secure
• Integrate everything with Xero for automated financials
• Periodically review fees and performance

If setting up or choosing the right payment gateway feels confusing—or you want to make sure your payment systems are working efficiently with Xero—contact Books Bean Kept. We’ll help you get it set up right and save you hours of back-end stress.

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