Power Retail hosted the Outlook Lunch on March 6 at Crown Towers in Melbourne, Australia. During the event, a panel presented key insights from the 2025 Ecommerce Payments Experience Report, a collaboration between Power Retail and Payments Consulting Network, supported by Stripe and Zip.

Grant Arnott, CEO and Founder of Power Retail moderated the panel, which included guest panellists Stephanie Carroll, Chief Financial Officer of Adore Beauty; Rod Williams, General Manager Online at Baby Bunting; and Liz Beggs, Chief Operating Officer of Payments Consulting Network and Merchant Advisory.

Flexible Payment Solutions

The report examined what payment methods consumers have been using over the past six months. Unsurprisingly, debit and credit cards were the preferred choices, accounting for 78%. Interestingly, 26% chose flexible payment solutions, including BNPL providers, which have been available for about 10 years, almost on par with BPay, bank transfers, and gift cards.

Given Adore Beauty and Baby Bunting’s different customer demographics, Grant asked why they thought flexible payment options had gained so much traction, especially with the younger demographic in the 24-34 age bracket, at 58%.

Stephanie highlighted that these options are quite cost-effective from a customer’s perspective. Customers receive the product immediately and can pay for it in instalments over a period of time. Although the average spend per customer is not particularly high, they still use flexible payment methods nearly as frequently as other payment options. While these payment methods can be costly for a retailer, Stephanie emphasised the importance of considering the customer’s lifetime value rather than focusing solely on the profitability of a specific payment type.

Rod concurred that flexible payments are easy to use, especially for customers starting a family, as it can be costly. Investing in larger items like a pram, cot, and car seat with 12 months interest-free must be appealing when facing current pressures such as mortgages, high interest rates, and the general cost of living expenses.

Strategies to Minimise Payment Costs

Grant asked Liz about what strategies merchants can use to minimise payment costs, especially since debit and credit cards are the most commonly used payment methods.

Liz advised retailers to review their payment providers every three to five years. Many businesses tend to “set and forget” their payment arrangements, but the industry constantly evolves. Benchmarking your pricing to ensure you receive competitive rates is essential, and reviewing invoices against current contracts is crucial to confirm that your pricing is accurately applied. To help reduce debit and credit card costs, Liz suggested several strategies:

1. Least Cost Routing (LCR): When a customer pays with a dual-network debit card, the merchant can route the transaction through the debit network, which usually incurs lower costs. Most, if not all, Payment Service Providers (PSPs) offer LCR, so merchants should verify that they are LCR-enabled.
2. Network Tokenisation: This involves encrypting a credit card using card schemes (Visa, Mastercard, and Amex) so that the card number (or Primary Account Number – PAN) is not stored in its raw form. The benefits of network tokenisation include:
   • Enhanced Security: It helps protect customer information from data breaches and fraud.
   • Increased Authorisation Rates: If the PAN associated with a network token changes or expires, the token remains current and usable. This reduces the number of declined charges due to outdated credentials and boosts authorisation rates.
   • Lower Transaction Costs: Tokenised online transactions tend to attract lower interchange fees, especially if the merchant is on IC+ or IC++ pricing. Therefore, implementing network tokens can help lower overall costs.
3. Recurring Payments: For businesses with recurring payments, it is important to ensure that these transactions are properly flagged in your payment system. This designation can help reduce interchange costs and, consequently, overall expenses.
4. Subscription-Based Businesses: A simple step is identifying recurring transactions, as they typically incur lower costs under interchange rules or rates than one-time transactions. If these transactions are not classified as recurring, you may miss the benefits of reduced interchange fees.

By implementing these strategies, Liz says retailers can effectively manage their payment processing costs and improve their bottom line.

Guest Checkout Versus Customer Loyalty

Balancing the option of guest checkout with the goal of building customer loyalty can be difficult for many retailers. The consumer report revealed 24% of respondents prefer guest checkout for online safety reasons. This statistic surprised Rod, who noted that, like many retailers, they would ideally like customers to log in consistently, allowing them to identify their customers and create profiles to enhance loyalty and the ability to implement targeted marketing campaigns. However, this perspective highlights their focus on the utility and benefits of a logged-in session, aiming to offer more than just a loyalty points system. They strive to provide advantages such as an easier returns process, a centralised location for all receipts, and the ability to track wish lists and registries to create a seamless loyalty experience. Nonetheless, like many retailers, they prioritise conversions and are committed to supporting and empowering customers to check out in the manner they prefer.

Shipping Costs

Grant noted that for 40% of consumers surveyed, the most common reason for abandoning a shopping cart is due to high shipping costs. While there is no such thing as free shipping as ultimately someone has to pay for these costs, retailers need to balance recouping these costs with customer expectations. Further, you need to balance getting a sale with cart abandonment. Therefore, what strategies have you put in place to tackle this issue?

Adore Beauty has a low minimum shipping threshold of $30, which is modest compared to its average order value. This means that customers typically qualify for free shipping. However, the key factors for customers are the speed of delivery and the convenience of choosing between online or in-store options, especially since Adore Beauty has recently become omnichannel by opening two physical stores.

On the other hand, Baby Bunting has disrupted the market by introducing a same-day priority delivery service from their stores across Australia and New Zealand within the last six months. They have observed a trend where customers opt for paid same-day or next-day delivery options instead of relying on free shipping for orders over $150. This shift indicates that customers highly value the speed of delivery and are willing to pay for it.

Future Payment Trends

When asked about her views on future payment trends, Liz provided insights from a retailer’s perspective, highlighting the following key points:

1. Payment Methods Evolving
   • Digital Wallets: The adoption of digital wallets is expected to increase, potentially surpassing the use of physical credit cards. The consumer report indicates that 20% of consumers have used Apple Pay in the last six months, a figure that is anticipated to rise, enabling a more seamless checkout experience.
   • Flexible Credit Options: Approximately 40% of surveyed consumers use flexible credit options, with the largest demographic being individuals aged 24 to 34. This number is expected to grow due to current cost-of-living pressures as well as convenience for the consumer.
   • PayTo/Instant Payments: The adoption of this payment method, which offers low-cost options for merchants, is anticipated to rise.
   • Simplified Checkout: Features like Click to Pay, Link (by Stripe), and Shop Pay (by Shopify) make the checkout process more efficient, as consumers do not need to enter their payment details each time they make a purchase.

2. Cross-Border Payments: With retailers now able to sell to customers globally, cross-border payments have become increasingly important. Given the high costs associated with accepting international cards, retailers should consider offering local payment methods to their consumers.

3. Payment Security: About 32% of consumers enable two-factor authentication, while 30% look for a padlock icon in the merchant’s URL. As the payments landscape evolves, it is crucial to enhance fraud-prevention measures.

4. Omnichannel Experience: Although not specific to payments, the omnichannel concept poses challenges for retailers operating instore and online. Consumers expect retailers to recognise who they are and their purchase history, regardless of where they have made their purchase. Retailers must implement systems that support this, including payment service providers (PSP), point-of-sale (POS) systems, stock management, customer relationship management (CRM), and enterprise resource planning (ERP) systems.

Game-changing Payment Innovations

The final question posed to Adore Beauty and Baby Bunting was whether they could share any game-changing developments they have made in consumer payments.

Rod mentioned that one significant change they have implemented in the past six months is rethinking their payment processes by adopting Payments Orchestration. This shift has resulted in an impressive 2-4% increase in their authorisation rates. The new approach offers flexible payment options, multiple acquirers, and network tokenisation independent of any specific payment service provider.

Stephanie pointed out that Adore Beauty features an “endless aisle” capability. This allows customers to access and purchase from their entire inventory through a digital touchscreen, including items not physically available in the store. Since they operate in a small retail space and cannot display all 315 brands, this innovation enables customers to shop for their entire product range instore, enhancing the shopping experience from a payments perspective.

To review the 2025 Ecommerce Payments Experience Report, please download it here. The report was supported by Stripe and Zip.

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Author: Bernadette Walsh, Marketing Partnerships Manager, Melbourne, Payments Consulting Network

Bernadette’s diverse work experience has given her the opportunity to observe the different approaches to business and problem-solving, allowing her to develop a unique perspective on how to build relationships and solve problems. Her resourcefulness and willingness to think outside of the box have been invaluable assets in her ability to find creative solutions to complex problems.

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