NZ consumers’ top 5 ways to pay online

Online spending in New Zealand is on the rise. In fact, Q1 2021 saw far more money spent online by Kiwis than the same period in 2020 (up 27%) or 2019 (up 50%), according to NZ Post.

With 2.16 million shoppers online during this period, and an average basket size of over $100, there’s a lot of money to be made from e-commerce for businesses that can attract customers.

But there are a lot of different ways to pay for goods online, and even though some are very common (i.e. credit cards), they might not be as popular as you think.

So what are the top online payment options Kiwi consumers want?

1. Plastic – debit cards and credit cards

Unsurprisingly, plastic cards (we’ve combined debit and credit here) take the top spots, according to Yabble/Payments NZ (Payments NZ Consumer Study 2020). The former is more popular than the latter, although Yabble’s data does also take into account in-store payments so the data is slightly skewed.

How to offer debit/credit cards as a payment option: You’ll need to connect your e-commerce shopping cart with a payment gateway provider such as Paystation or Flo2Cash.

Quick facts:

  • 89% of Kiwis use a debit or EFTPOS card, and 68% use a credit card.
  • That means for a third of Kiwis, credit cards aren’t a good payment option.
  • Actually, 49% of Gen Zers have never even owned a credit card (Laybuy).
  • Credit cards are dropping in popularity with younger people.

2. Banking apps/online banking

Coming in second in our top five list is banking apps. Customers like to trust the apps they already know, and their banking app is right up there.

Banking apps are growing increasingly sophisticated. These days they make it faster for customers to transfer money to other accounts, allow people to pay others via their mobile phone number, and can integrate customers’ mobile wallets into their day-to-day banking (i.e. ANZ customers on Android can access Google Pay via the ANZ app).

How to offer online banking as a payment option: This might be popular, but it’s a little clunky for an online store. Customers would need your bank details in order to organise online payments, or your mobile number to pay you directly.

Quick facts:

  • 83% of customers used a banking app or online banking to make payments in the last 12 months, but this includes all payments – bills, invoices, you name it.
  • Online banking is universally popular, though least so with older people.

3. Mobile wallets and other payment apps

Most smartphones nowadays come in-built with some kind of payment app, such as Samsung Pay, Google Pay or Apple Pay. Although other third-party apps are available, like Alipay and PayPal. Given their prevalence, it’s perhaps no surprise to see their popularity grow – right into third place.

What do these apps do?

These apps act like intermediaries between someone’s debit or credit card and a merchant. They are like mobile wallets, storing people’s various cards so that they can be accessed quickly and digitally.

PayPal and Alipay are a bit different in that they’re more of their own payment gateway, not a mobile wallet. Customers use them to transfer money, businesses can integrate them into their checkout as a gateway.

How to offer payment apps on your website: You can either implement each wallet individually via their own developer APIs, or look for a payment gateway provider as mentioned above that offers these options in-built (as many do).

Read more: “Is Google Pay right for your e-commerce store?”

Quick facts:

  • 39% of Kiwis used a payment app in the past 12 months, according to Yabble.
  • They are similarly popular with younger and middle-aged customers, but less so (and falling) with older customers.

4. Direct online payment apps (i.e. POLi)

Direct online payment apps like POLi and Account2Account let customers pay merchants directly using their online banking account. So instead of needing to log in to their banking app, type in someone’s details and transfer money, these apps connect the two systems together so that payments can be made instantly right there on the merchant website.

Apps like POLi can also be integrated into your business in other ways. For example, you can add a POLi “Pay Now” button to Xero invoices so that your clients can pay you directly from their invoice.

How to offer direct online payment apps on your website: Again, you have two options – integrate directly using the app’s developer API, or find a payment gateway that already includes it as an option.

Quick facts:

  • A third of Kiwis use these kinds of apps to make online payments so there’s a big market for them.
  • POLi is already in use by some of NZ’s biggest brands, such as The Warehouse, PB Tech and Waka Kotahi (NZ Transport Agency).

5. Buy now/pay later

Buy now/Pay later (BNPL) services such as Afterpay or Laybuy represent a smaller market than all of the above, but they’re growing pretty rapidly.

What do BNPL services do?

When a customer uses a BNPL service, it’s like starting a payment plan without any interest attached. The total cost of goods is split into equal payments (i.e. four fortnightly payments) and the customer pays these back in installments. They don’t pay any interest or additional fees (although you as a merchant would pay a fee).

The idea is that it lets customers make larger purchases in smaller chunks, without having to worry about, for example, credit card debt.

How to offer BNPL on your website: As above, you will need to integrate with the appropriate APIs or find a gateway that includes them out of the box.

Quick facts:

  • Just less than a quarter of Kiwis used a BNPL service in the previous 12 months.
  • That said, they’re growing – NZ Post found they grew 49% in Q1 2021.
  • The service is growing most rapidly with young people (Yabble/NZ Payments).

So what of these payment options should I be offering on my online store?

The honest answer? Probably all of them! Even the smallest of these options still represents as many as a quarter of all Kiwis – a huge opportunity.

But ultimately it’s up to you which services you wish to offer. Generally it’s best to try and offer as many as possible because people like to pay the way they like to pay, and not everyone has a credit card. If you can give people the payment services they already know and trust, you could better encourage sales. Neglect to branch out, and your competitors might steal your customers away.

That said, these services generally charge setup and/or transaction fees. You’re going to need to balance this reality with the drive to offer more diversity so that you can give customers as many options as possible without hurting your own bottom line. The only way to know which service is right for you is to compare them and, perhaps, ask your customers what they want to see.

Related FAQ

Should I offer cryptocurrency?

This is going to have to be a personal decision, but know that Yabble/NZ Payments found only 2% of Kiwis were using crypto last year. It is another payment option so you could argue that it adds more variety to your website, but the value of crypto fluctuates so often some experts warn against it as it’s a bit of an uncertainty.

Do customers still use cheques?

A very small percentage of customers still use cheques and you’ll see around the country that many banks and businesses are ceasing to offer this as an option. Cheques are also not used online.

Are online payment options generally safe?

The options we’ve mentioned today are, generally speaking, considered safe to use. Most online payment services either rely on the bank’s own cards (debit/credit) or an open banking API. To learn more about the safety of open banking, click here.