Fintech boosts Australian small business by AUD $9bn

A new report by FinTech Australia and the economics firm Mandala has quantified the impact of fintech innovation in payments on the Australian small business sector, revealing benefits totalling AUD $9 billion.

The research highlights that small businesses have experienced significant advantages from adopting fintech-powered payment systems. The report serves as FinTech Australia's first major examination of the tangible economic impact of the fintech industry in Australia.

According to the findings, of the AUD $9 billion in benefits, AUD $8 billion arises from increased revenues due to the adoption of fintech services, while a further AUD $1 billion results from cost reductions. More than 30% of businesses reported a growth exceeding 2.5% after implementing a fintech payment solution.

The adoption rate of fintech solutions amongst small businesses is notable, with over 56% using fintech providers for in-person transactions. Additionally, 57% of regional small businesses prefer fintech payment solutions over traditional banking options.

Rehan D'Almeida, Chief Executive Officer of FinTech Australia, commented on the findings, "This report finally quantifies the power of fintech to transform our economy." He elaborated, "We frequently hear that small business is the engine room of the Australian economy. Well, fintech is fuelling that engine room and directly contributing to its growth."

"Through adopting new payment technologies, small businesses are not only reducing costs, which is what we expected, but are also growing their revenue. Its impact isn't fully realised either, with only half of Australian small businesses leveraging these fintech solutions," D'Almeida continued. "With support, we can see fintech supercharge more areas of the small business ecosystem, further growing overall revenues and reducing costs."

The report also addresses obstacles hindering broader adoption of fintech payments, primarily concerns over operational costs, security, and privacy. D'Almeida remarked, "In many instances, fintech solutions are safer and more operationally efficient than their counterparts. The data indicates that our key challenge for further growth is educating the broader SMB market."

The release of this report coincides with the Reserve Bank of Australia's review of payment surcharging. Findings from the Mandala report have been incorporated into FinTech Australia's submission to the review process.

D'Almeida added, "While the surcharging model isn't perfect, small businesses have built their businesses around these surcharging rules for two decades and would be disproportionately impacted by a ban." He further stated, "We want to help the government get the balance right, and help make other digital surcharge-free methods of payment available to consumers. The surface-level solution of banning surcharging would be a heavy blow to small businesses, have knock-on effects for consumers, and undo the benefits the fintech sector is providing the overall economy."