Competition among e-commerce payment gateway providers in Australia has heated up, as key companies have had more than a year to get footing in a country increasingly adapting to new payments technology.

Viewing e-commerce and mobile point of sale as too complex for merchants, Australia-based eWAY is offering a single rate of 2.6% for transactions from all cards, regardless of their category. The company hopes to counter companies like Stripe and Square, which entered the Australian market last year.

eWAY's business decision puts it in the spotlight, as other companies monitor the strategy’s effectiveness.

"Australia, though big in geography but small in terms of consumers, is like a payments lab, and many entrepreneurs kind of look at it that way," said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC. "A blended rate at 2.6% has more impact in Australia because they have lower interchange. It's a risky business, and not a sustainable pricing model if most of the transactions came on American Express cards, but they can extend pricing models like this with an amount of certainty in Australia."

Australia is a mature card market and its merchants embrace e-commerce, while its consumers are similar to Americans in wealth and spending habits, said Scott Strumello of New York- and London-based Auriemma Consulting Group. Such a scenario makes the country an attractive market for global payments providers.

However, eWAY's move to establish a flat 2.6% rate is "just a number" that some merchants may simply use to shop for even better rates, Strumello said. "However, it does speak to the importance of transparency in pricing," he added. "When you look at some merchant acquiring pricing, it is very complex. Maybe that's about to change the dynamics of the conversation that merchants have in the e-commerce space. If it catches on, it could take hold globally."

Though he would not comment on how competitors Stripe and Square have fared in his country, Matt Bullock, CEO of eWAY, said merchants in Australia want to work with a company that understands the market as they begin accepting online or mobile payments.

"The strongest convincing factor for small merchants to get online is the huge shift in consumer behavior in Australia," Bullock said. "Australians are significantly ahead of the rest of the world in mobile adoption for e-commerce and financial services."

As such, eWAY's goal is to "show merchants how simple and affordable it really is to accept payments online, and give them the tools to do it," Bullock added.

Stripe and Square both feel they have had a significant impact after entering an Australian market that was already heating up last year. Both companies made their move to the land down under about the same time Australian bank-owned Eftpos began testing online payments off supermarket chain Coles' website. It was viewed as a way for Eftpos to compete with PayPal Australia Pty Ltd., a licensed deposit-taking institution following Australian banking laws and regulations.

Square was quick to establish its mobile card reader in the market, not long after promoting Square Market as an e-commerce site for micro merchants. The company opened an office in Melbourne three months ago to further promote its Square Register software. At the same time, the company hired Ben Pfisterer, a former National Australia Bank and Visa executive, to lead its Australian division. Square has offered Australia its same 2.75% rate per card swipe or sale with Online Store, regardless of card, and a 3.5% plus 15 cents rate for manually entered transactions.

Square recently launched its Dashboard app in Australia, allowing businesses to check real-time sales from an iPhone device. "We have an exciting product roadmap for Australia and we are looking forward to sharing that with local small businesses soon," said Josh McNicol, a spokesman for Square in Australia.

Establishing the free Square Register POS app in Australia has helped the company "build up an active base of sellers using our ecosystem," McNicol added.

Stripe rolled into Australia with a 1.75% rate, plus 30 cents, for Australian cards and a 2.9% rate plus 30 cents for international and American Express cards for processing online payments.

"In general, we've seen great momentum in Australia, where Stripe now powers some of the country's largest online businesses, including 99Designs, RedBalloon, and Catch of the Day," said Stripe spokesman Tim Drinian.

Stripe is scoring points with merchants because of its reliability in the aftermath of some payments problems in the country last month, Drinian said. Those problems occurred with Australia Post's SecurePay suffering transaction outages.

"In a lot of ways, payments is the last hard infrastructural problem of the Internet," Drinian added. "We're bringing more and more people online, but less than 5% of global consumer spending happens online today."

Stripe is removing barriers to online transactions and the company is looking forward to working with "many more great Australian companies and give them the software tools to keep growing their business," Drinian said.

In nearly two decades of serving the Australian market, eWAY's Bullock can attest to how the payments landscape has changed and, in many ways, confused merchants during the transformation.

"Small businesses need simple, holistic solutions," Bullock said. "In order to support that organic growth of merchants trying e-commerce, we are providing the tools like mobile POS devices and flat-rate services that are relevant to these businesses."

Mostly, eWAY welcomes the competition. "We think increased competition is a good thing for small businesses," Bullock said.

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