Fintech News: Xero Report Highlights the Importance of Payment Convenience for Kiwi Consumers Amid Barriers for Small Businesses
New research from the global small business platform Xero highlights that payment convenience is crucial for Kiwi consumers, but steep fees are deterring small businesses from adopting new digital payment methods. Launched today, Xero’s latest report, titled “I want to pay that way,” explores shifting consumer payment habits and how small businesses are responding.
The report reveals that 75% of New Zealanders typically use a physical bank card for in-store payments, while 14% rely solely on their mobile phones. Cash is among the least used methods, with only 8% of Kiwis carrying cash for in-store purchases. However, small business owners are more reliant on cash, with 72% believing that the disappearance of cash would significantly impact their operations.
Bridget Snelling, Aotearoa New Zealand Country Manager at Xero, emphasizes the importance of digitalization for small businesses in offering customer payment options. She notes, “Aotearoa New Zealand has a strong history of embracing innovative payment solutions, starting with EFTPOS. As technology evolves and convenience becomes more critical, it’s important we continue to advance in this area.”
Consumer preferences are clearly shifting, with 25% of Kiwis using Apple Pay or Google Pay, led by younger generations. Among Gen Z, 48% use these mobile payment options, compared to 28% of millennials, 17% of Gen X, and 11% of Baby Boomers. Despite this trend, only 17% of Kiwi small businesses currently offer Apple Pay and/or Google Pay.
Snelling points out the disconnect between consumer preferences and small business payment offerings, noting that just 39% of Kiwi small businesses have adopted a new payment method in the past 6 to 12 months. Additionally, 87% of small business owners face barriers to offering new payment methods, with 32% citing high fees, 28% seeing no clear benefits, and 26% finding the setup process too complex or time-consuming.
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For those small businesses that have embraced new payment methods, the primary benefits include faster payment times (19%), increased sales (16%), and reduced time spent chasing payments (14%).
The shift to digital payments also has broader economic implications. According to research conducted with the New Zealand Institute of Economic Research, a 20% increase in the adoption of cloud-based business tools could add up to $7.8 billion to Aotearoa’s annual GDP through enhanced productivity.
Xero is committed to helping small businesses unlock their economic potential by providing seamless payment solutions that support healthy cash flow. Bharathi Ramavarjula, SVP of Payments at Xero, stated, “Understanding consumer payment preferences and offering flexibility will help small businesses get paid faster and grow their revenue. To simplify payment collection, Xero is offering more payment options within its platform.”
