What are the best digital checkout options for small businesses?

Here’s a selection of the main Buy Now Pay Later options, what they do, and what it will cost small businesses to use them.

This article was written for and originally published by SmartCompany.

There’s never been more ways for businesses to take people’s money – so let’s explore the various checkout options now available to small businesses.

In short, things are getting crowded. Ecommerce and the digitisation of small businesses have transformed how consumers pay (or seemingly pay) for things.

Digital wallets, payment gateways, Buy Now Pay Later, traditional cards, even crypto options are amassing faster than a credit card bill at a long lunch in the ’80s.

Buy Now Pay Later transactions were equivalent to about 1.7 per cent of Australian card purchases (about $11.5 billion in payments) in the year to June 2021, according to the Australian Bureau of Statistics. 


So the landscape is changing fast, but what does that mean for businesses collecting payments? 

Businesses need to keep their eyes on the prize of building their companies while keeping customers happy and buying in the ways they like.

That means getting the mix right when customers hit the checkout – be it online or in-store. And while many services claim to have transparency around fees for businesses, the truth seems to be that it depends what business you are in, who your customers are, and how they like to pay.

Here’s a selection of the main options, what they do, and what it will cost you to use them:

Digital Wallets

What are they?

We’re talking about the big guys here – the likes of Apple Pay and Google Pay. These use the payment systems built into smartphones. Your customers hold their phone up to the machine and boop, their choice of pre-loaded cards will be charged. The technology is called near field communication (devices that can talk to each other) and it’s quick and secure. Pretty much all tap-enabled EFTPOS machines have it now.

Digital wallets are also fantastic for mobile payments. So if you have an ecommerce store that smartphone users love, it can go a long way to capturing their money and their hearts. They simply tap the button on the online store’s checkout, and their smartphone does most of the rest. Magic.

How many people use them?

I believe the official phrase is “a metric f#$% tonne”. About 40 per cent of smartphone owners use them as their preferred method of payment. 

What do they cost businesses?

Allegedly nothing.

The card user will pay their bank’s usual transaction fees, if any, and businesses are charged their usual transaction fees from the bank to accept the payments. 

Apple requires banks to give it a cut of the interchange fees associated with Apple Pay, but it doesn’t allow banks to recoup these costs from their customers. Google says it charges no merchant fees to accept Google Pay.

But for how long? *Cue vampire music*


Head to their websites, register, and follow the prompts. If you’re in ecommerce land as well, you may need a developer’s help to implement, though many businesses do it themselves thanks to easy integrations with popular ecommerce software.

Should your business use them?

It’s a yes from us.

Payment gateways

What are they?

In internet terms, they’re old magic. We’re talking PayPal, Stripe and Square. PayPal is the OG in the group and has been popular since Greg Internet himself started collecting money online.

Stripe and Square are later entrants but have become hugely popular among different business segments. 

All of them offer a gateway to accept credit and debit card payments on the internet, while Square has also ventured into point-of-sale equipment, such as card readers, terminals and cash registers. Square is popular among microbusinesses, but has recently become more popular for bigger stores that need strong integrations between online and brick-and-mortar sales.

Basically, if you’ve been on a website that accepts debit and credit card payments, there’s a big chance you’re using their technology to do it.

There are also quite a few other players here, but we don’t want to be here all day.

How many people use them?

Again, the numbers are large.

  • Stripe: 3.1 million websites
  • PayPal: 7 million Australian accounts
  • Square: A lot. There doesn’t seem to be one exact number everyone agrees on, but it is in the millions.

What do they cost businesses?


For SMEs, PayPal costs 2.6 per cent of the transaction plus 30 cents.


For SMEs, Stripe costs 1.75 per cent of the transaction plus 30 cents. For huge volume sales you can get bespoke pricing.


It’s a little more complicated because of their point-of-sale equipment, but in-person sales cost between 1.6 per cent and 1.9 per cent per translation, and online transactions cost 2.2 per cent per transaction. But go to their website for the full breakdown and to see their hardware costs (which seem quite reasonable). 


Again, you might need an expert to help you implement these on your website, but all of them have gotten a lot more layman-friendly as they’ve evolved. 

Should your business use them?

They are the big players, and a lot of businesses trust them to keep the cash ticking over. Using their credit card processing features next to other payment options (e.g. one or two BNPL options and a digital wallet option) seems to be the norm. Price is probably the driver for businesses here, so it will land on how much you’re willing to pay per transaction, and whether or not you have a physical location, which will mostly send you in the direction of Square if you do.

Buy Now Pay Later

What are they?

Customers use a Buy Now Pay Later app to split a payment for a product or service into several smaller payments plus a small service fee, without paying any interest.

Businesses get the full amount upfront from the Buy Now Pay Later provider, minus any merchant fees.

The payment terms vary. Many have four fortnightly repayments, but that can change depending on the platform and the purchase cost. LatitudePay (formerly GE Finance) offers 10 payments, for example. But they also get used for more expensive things.

If consumers miss a payment, they don’t get hit with interest but they do incur late fees for their sins. In practice, they’re not that different to the traditional interest-free deals Harvey Norman has used to keep Gerry Harvey’s fleet of hovercrafts with disco balls and money cannons operational all these years.

And while many focus on retail goods such as clothes and household items, there are specific providers for certain industries. Brighte, for example, is in solar electricity hardware.

Most BNPL providers integrate with leading ecommerce software, such as Shopify, WooCommerce, Neto, Magento, BigCommerce and more.

Here’s an interesting fact: According to the Australian Securities and Investments Commission, BNPL users were more likely than the general population to experience financial stress in the past 12 months (21 per cent versus 12 per cent) and more than twice as likely as credit card holders (9 per cent).

In Australia, the BNPL field is growing. But let’s take a look at some main ones.

  • Afterpay
  • Zip
  • Klarna
  • Humm
  • LatitudePay

How many people use them?

For all the press they get, they’re still dwarfed by credit and debit card payments, though they are growing in popularity.

  • Afterpay: 63,000 merchants in Australia and New Zealand, and 16 million customers globally 
  • Zip: More than 38,000 merchants across the US, Australia, New Zealand and the UK and 5.7 million active customers
  • Klarna: 25,000 merchants and more than 1 million app downloads as of late last year
  • Humm: 20,000 merchants and 2.7 million customers
  • LatitudePay: 5,500 merchant partners and more than 500,000 accounts across Australia and New Zealand.

What do they cost businesses?

In lieu of extremely clear and transparent pricing on their websites, here’s what we’ve been able to gather about what each platform charges merchants.


30 cents per transaction and a commission rate fee per transaction that ranges from 4 per cent to 6 per cent, based on your agreement.


15 cents per transaction and a commission rate per transaction that ranges from 2 per cent to 4 per cent, based on your agreement.


30 cents per transaction and a commission rate per transaction of 4.99 per cent.


The answer is written on the wind somewhere, I’m sure.


1 per cent to 3 per cent commission rate per transaction. 

Should your business use them?

BNPL providers have certainly attracted the gaze of regulators during their ascension. So as the industry matures, expect tighter regulations. 

Many ecommerce stores and retailers are already on board, and you could probably make that call depending on which BNPL provider fits your industry and your business. 

One of the things to consider in offering the full suite of BNPL providers is the risk of looking like a vulture that will pick the credit bones of any willing or unwilling customer, although you can certainly make the case that this is ultimately the customer’s call to make.

Consider, too, that the user experience of entering an online checkout and seeing an array of buttons pointing to myriad options can just as easily scare shoppers and their dollars away. It’s possible some enterprising tech entrepreneur will come along and create a single-click option that aggregates all the BNPL providers and creates a cleaner checkout, but that day has not yet arrived.  

The most palatable answer is most likely in offering two BNPL options – say Afterpay and Zip, since they have the most active users, unless a more niche provider is a better fit with your specific industry – alongside a credit and debit gateway and a digital wallet option. 

Ultimately, getting the mix right could be the difference between your customer using your checkout, or choosing to check out. 

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