Last editedAug 20239 min read
Alternatives to Stripe in Australia encompass payment solutions, including BECs, bank payments, and card payments, that serve as viable options for businesses seeking options to the widely used online payment platform. This article presents the top five alternative providers in Australia, comparing their features, pricing, and suitability for different business models. Discover reliable, secure, and tailored payment methods to streamline transactions and enhance customer convenience.
Stripe is one of the best-known payment-gateway providers worldwide, with major global brands, including the mighty Amazon trusting it. However, there are many alternatives to Stripe available in Australia, and some of these may offer better deals for your business, especially if it’s on the smaller side.
Understanding Stripe
Stripe is well-known for being a payment gateway created with developers in mind. It’s also a highly-customisable solution with many client and server libraries to help you create your solution.
If this isn’t what you’re looking for, Stripe also offers a wide range of partner integrations and an online dashboard. That being said, so do several of its competitors.
Stripe pros and cons
Stripe is known for offering three main benefits. These are:
A high level of customizability
The ability to manage all payment-related actions from one place
Global reach
However, Stripe is also known for having three main drawbacks. These are:
Stripe’s out-of-the-box solutions are not as comprehensive as its support for developers
Its customer service can be challenging to navigate
Stripe is very much a card-first company, and its global reach comes from its integration with the card networks rather than its infrastructure
Being a “card-first company” can present several challenges. Firstly, there is the issue of significant manual administrative burdens associated with card payments. Data entry, reconciliation, and financial reporting can be time-consuming, error-prone, and inefficient without streamlined automation systems.
Secondly, high fees and a lack of pricing transparency pose concerns for businesses using card-first services. The variability in card payment processing fees and the absence of clear pricing information make it difficult for companies to manage their expenses effectively. Additionally, high transaction fees imposed by card intermediary networks can impact profit margins and cash flow, particularly for small and medium-sized enterprises.
Stripe's reliance on card payments also exposes it to high payment failure rates. Card payments fail at a rate of 10 - 15% due to declined transactions, expired cards, and insufficient funds – contributing to revenue loss and loss of customer trust. Effectively managing payment failures requires robust fraud detection systems, customer notification mechanisms, and personalised support. A lack of these elements strains operational resources and impacts the overall payment experience for businesses and customers.
The main alternatives to Stripe
The main alternatives to Stripe in Australia are GoCardless, Square, PayPal, eWay and Braintree. These can all be used to replace Stripe. Alternatively, except for Square, they can be used to complement Stripe. Here is a quick overview of each of these alternatives to Stripe.
GoCardless
GoCardless focuses on bank-to-bank payments. In Australia, it supports both BECS payments and PayTo payments. PayTo is powered by the Australian New Payments Platform (NPP). It makes taking both one-off and recurring payments faster, easier and more secure than ever before.
GoCardless’ transaction prices are very attractive. It also offers a range of service packages to suit different needs, including a plan with no monthly fees.
GoCardless’ headline selling points are:
Its ease of use
Its low percentage of failed payments
GoCardless can be used via an online dashboard, a range of partner integrations or a robust and well-documented API. This means that it’s easy to fit GoCardless into existing business systems and processes.
What’s more, GoCardless can help to reduce the amount of payment-related administration businesses have to manage.
In particular, the fact that GoCardless is a bank-to-bank payment system means that payment failures are minimal. When they do happen, payments can be retried automatically or manually, according to each merchant’s preference.
Square
Square is a payment gateway provider and point-of-sale system that offers a range of features to help businesses manage their payments. Like Stripe, Square is very much focused on payment cards.
Square’s transaction fees are competitive, offering a range of pricing plans for businesses with different needs. This includes a free plan.
Square’s headline selling points are:
1. Its ease of use
2. Its vast range of integrated tools and partner integrations
These selling points are, however, also Square’s weaknesses. Essentially, this platform’s simplicity and high level of native functionality are very appealing to smaller businesses. Unfortunately, they also tend to make it uncomfortably restrictive for larger ones.
PayPal
PayPal is an e-wallet. This means it allows account holders to load it with funds which they can then spend at merchants that accept PayPal. Cards back many PayPal transactions. Some are backed by bank debits, and others by funds sent by other PayPal account holders.
PayPal’s fees are relatively expensive, even for merchants that qualify for volume discounts/custom pricing. With that said, they do have a pricing plan that has no monthly fees.
PayPal’s headline selling points are:
Its ease of use
Its wide acceptance and recognisability
It is, however, worth noting that any customer who has a PayPal account has to have a means of funding it. That means a card and/or a bank account. This means that any payment processed by PayPal could potentially be processed by another payment gateway provider.
Also, while PayPal is effectively an online-only payment gateway provider, it does have a subsidiary brand, Zettle, that provides real-world payment processing services. Unfortunately, Zettle did not make it into the list of top five alternatives to Stripe.
eWay
eWay offers a range of payment processing options, including credit and debit card payments, recurring payments, and the ability to accept payments in multiple currencies. eWay's transaction fees are competitive. Furthermore, they decrease as the monthly sales volume increases.
In addition to its payment processing services, eWay offers a range of features to help businesses manage their payments and sales, including invoicing, reporting tools and integration with popular e-commerce platforms like WooCommerce and Magento.
eWay’s headline selling points are:
Its emphasis on fraud prevention
Its value-add functionality
It’s important to note that, currently, eWay only processes online payments. Merchants needing to process payments in the real world, therefore, require another solution.
Braintree
PayPal actually owns Braintree. Like PayPal, Braintree allows merchants to charge customers through multiple payment types (including PayPal). Unlike PayPal, its transaction fees are fairly competitive. It also has options for volume discounts and/or custom pricing.
Braintree offers many advanced features, including reporting tools to help businesses analyse their sales data. These features can, however, be complex to set up and use.
Braintree’s headline selling points are:
It supports a wide range of payment types
Its advanced functionality
Like eWay, Braintree is very much geared towards online and mobile payments. Merchants wanting to take payments in the real world would have to look elsewhere for another solution.
Key Takeaways
Focusing on bank payments for collecting one-off or recurring payments can benefit businesses in a number of ways:
Payment success rates
Unlike card payments, which can fail for various reasons like loss, expiration, or theft, GoCardless' direct bank-to-bank payment collection service offers significantly higher success rates. Approximately 97.3% of payments are successfully collected on the first attempt. Even in cases where payments do fail, intelligent features like Success+ enable the recovery of an average of 70% of these failed payments.
Cost-effective
In addition to higher success rates, bank payments offer improved cost efficiency compared to card payments. Card transactions typically involve multiple intermediaries, each adding their own fee, thereby increasing the overall cost of each transaction to somewhere in the region of 1.5% to 3%. On the other hand, bank payments eliminate these intermediaries, resulting in lower transaction fees. This translates to cost savings and increased profitability for businesses.
Integrations
When considering payment solutions, integration with existing systems and processes is a crucial factor for many businesses. GoCardless addresses this by offering seamless integration with various platforms and billing software. This integration facilitates effortless incorporation of bank payments into existing operations, reducing manual tasks and enhancing overall efficiency.
Local payment methods
Finally, for businesses with international customers, providing local payment options can increase business success. Studies have shown that local payment options increase sales in that region. Bank payments enable this flexibility, and with GoCardless, businesses can collect payments from over 30 countries through the world's first global bank debit network. This capability allows businesses to expand their reach and ensure timely payments, regardless of their customers' locations.
Case Study: Loopit
Loopit, a car subscription company, is embracing subscription business models to transform car ownership, focusing on providing a streamlined customer experience.
According to Matt Blake, National Sales Manager at Loopit,
Subscription business models are a fantastic way to allow your customers to drive your cars, sample your brand, and not be committed to a long-term finance agreement.
To ensure reliable payments and minimise fraud risk, Loopit turned to GoCardless for direct bank payment integration. Jeremy Gupta, Chief Operating Officer at Loopit, highlights the advantages of direct bank payments:
For cards, you’re looking at around 80% of payments succeeding the first time. With direct bank payments from GoCardless, it's greater than 90%. A lot less fraudulent activity happens, and in terms of chargebacks, they're almost negligible.
Jeremy further emphasises the benefits of GoCardless's partnership, stating:
The technology we’ve built is extremely agile and allows us to keep pace with the growth of our customers. GoCardless is a like-minded company in terms of the agility of its technology, which is helping us to grow quickly and at scale.
Loopit's plans for global expansion are supported by GoCardless's global presence and innovative offerings. Jeremy expresses excitement about GoCardless's PayTo feature, powered by open banking, enabling real-time processing of direct bank payments. This partnership between Loopit and GoCardless aligns with their shared ambition to drive innovation in the payments industry and solidify Loopit as a major global player in the car subscription market.
Bank payment via GoCardless is more affordable, more secure and more reliable than accepting credit and debit cards.
"Customers don't need to worry about fraud like they do with credit cards and bank accounts don't expire, so they’ll never need to update their details." - Scott Westbrook, Director of Business Systems, Deputy
How can GoCardless help?
Setting up payment collection is fast and efficient with GoCardless. By automating the payment collection process, GoCardless drastically cuts down the administrative responsibilities of managing and tracking invoices for your team.
GoCardless makes it quick and easy to get started with no contracts or long-term commitment required. You can set up one-off or recurring payments in the merchant dashboard in just a few clicks. GoCardless automatically creates and sends all the necessary forms, doing all the heavy lifting for you. You can also connect to GoCardless via over 350 partner apps, such as Xero and Salesforce.
Discover how GoCardless can automate payment collection, making it easier to concentrate on what matters most – your business growth.
FAQ: Payment gateways in Australia
What are the payment systems in Australia?
Australia has several payment systems that facilitate the movement of funds and enable various transactions. Here are some of the key payment systems in Australia:
Electronic Funds Transfer at Point of Sale (EFTPOS): EFTPOS is a widely used payment system in Australia. It allows customers to make payments using their debit cards by electronically transferring funds from their bank account to the merchant's account at the point of sale.
BPAY: BPAY is a popular electronic bill payment system in Australia. It enables consumers to pay bills and invoices online or through their financial institution's phone and mobile banking services.
Direct Entry (DE): The Direct Entry system, also known as the Bulk Electronic Clearing System (BECS), facilitates the direct transfer of funds between bank accounts. It is commonly used for direct debits, direct credits, payroll payments, and other bulk transactions.
New Payments Platform (NPP): The NPP is an advanced payments infrastructure in Australia that enables real-time payments between participating financial institutions. It allows individuals and businesses to make instant payments, transfer funds, and send and receive payments using a PayID (such as a mobile number or email address) or BSB and account number.
Card Payment Networks: Australia has various card payment networks, including Visa, Mastercard, American Express, and Diners Club International. These networks facilitate card-based transactions, both online and in-person, using credit cards and debit cards.
Mobile Payment Systems: Mobile payment systems such as Apple Pay, Google Pay, and Samsung Pay are widely used in Australia. They allow consumers to make contactless payments using their smartphones or smartwatches linked to their payment cards.
PayPal: PayPal is a widely recognised and accepted digital wallet that allows users to make online payments, send money, and receive payments securely.
These payment systems offer individuals and businesses a range of options for conducting transactions, from traditional card payments and electronic transfers to real-time payments and mobile-based solutions.
What is the preferred payment method in Australia?
Preferred payment methods vary depending on the context and the specific needs of individuals and businesses. However, card payments, particularly through debit cards, are widely used and considered one of the most popular payment methods in the country. Debit cards offer convenience, security, and broad acceptance, making them a preferred choice for many Australians.
Additionally, contactless payments, including tap-and-go transactions, have gained significant popularity in recent years. This is due to the widespread adoption of contactless payment technology by merchants and the convenience it offers for quick and easy transactions.
Moreover, digital wallets and mobile payment solutions, such as Apple Pay, Google Pay, and Samsung Pay, have seen increased usage and acceptance among consumers in Australia. These platforms enable users to make payments using their smartphones or smartwatches, further enhancing convenience and eliminating the need to carry physical cards.
It's worth noting that while card payments and digital wallets are popular, other payment methods, such as bank transfers, BPAY, and cash transactions, are still widely used in specific situations or by certain demographics. The preference for a particular payment method often depends on factors such as personal habits, merchant acceptance, transaction size, and convenience.
What is the difference between payment system and payment gateway?
The terms "payment system" and "payment gateway" refer to different aspects of the payment process. Here's an explanation of the differences between the two:
Payment System: A payment system is a broader concept that encompasses the entire infrastructure and set of rules and procedures used to facilitate the transfer of funds between parties. It includes various participants such as banks, financial institutions, card networks, processors, and clearinghouses that work together to enable the movement of funds from the payer to the payee. Payment systems provide the framework for different payment methods, such as card payments, bank transfers, electronic bill payments, and more.
Payment Gateway: A payment gateway, on the other hand, is a specific technology or service that acts as an intermediary between an online merchant (seller) and the financial institution (acquirer) to process and authorise payment transactions securely. It serves as the interface that connects the merchant's website or application with the payment network, allowing customers to submit their payment details and facilitating the authorisation and transfer of funds. Payment gateways encrypt sensitive payment information, transmit it securely, and provide real-time transaction status updates.
In summary, a payment system is an overall framework that governs the transfer of funds, while a payment gateway is a specific technology or service that enables the secure processing and communication of payment information between a merchant and a financial institution. Payment gateways are a vital component within the broader payment system infrastructure, facilitating online transactions and ensuring the secure transfer of funds.