Short answer: for an Australian ecommerce store on Shopify, Shopify Payments is usually the most economical primary gateway because it waives Shopify’s additional third-party transaction fee. Stripe is ideal for WooCommerce, custom platforms or specialised billing models. Afterpay is not an alternative to card processing; it is an add-on that costs significantly more per transaction in exchange for potential cart-size and conversion gains that must be weighed against your product margins.
Every online sale involves a trade-off between customer convenience, checkout friction and payment processing costs. For an Australian business, transaction fees are taxed with GST, international cards carry higher interchange rates, and Buy Now Pay Later services can take a significant percentage of top-line revenue. This guide compares Stripe, Shopify Payments and Afterpay so you can design a payment stack that protects profitability without creating checkout drop-offs.
Key Takeaways
- Shopify Payments is powered by Stripe infrastructure, and its plan-specific domestic card rates must be checked against Shopify’s current Australian pricing page before publishing or budgeting.
- Stripe standalone standard pricing in Australia is 1.7% + A$0.30 for domestic cards, with BECS Direct Debit available at 1% + A$0.30 capped at A$3.50.
- Stripe’s published Australian rate for Afterpay is 6% + A$0.30 per successful charge, plus surcharges for international transactions and currency conversion.
- GST treatment is provider-specific. Stripe’s published Australian card rates include GST, while registered businesses should confirm input-credit treatment with the ATO and their tax adviser.
- Do not activate every payment method by default: calculate whether high-fee BNPL options generate incremental sales or simply cannibalise card transactions.
Fee Comparison Across Gateways in Australia
These figures are a planning guide, not a quote. Stripe’s official Australian pricing page lists 1.7% + A$0.30 for domestic cards and 1% + A$0.30 for BECS Direct Debit, with the latter capped at A$3.50. Stripe’s local payment methods pricing lists Afterpay at 6% + A$0.30 per successful charge. Shopify’s Australian pricing page is the source of truth for the current plan and third-party transaction fee schedule.
Processing fees differ significantly depending on the platform, transaction volume and payment method. The table below compares standard headline rates for Australian domestic transactions.
| Gateway / Method | Domestic Card Rate | Fixed Fee | Third-Party Surcharge on Shopify | Best Suited For |
|---|---|---|---|---|
| Shopify Payments | Plan-specific; verify current rates | A$0.30 | 0% (third-party fee waived) | Stores built on Shopify wanting lowest platform costs |
| Stripe (Direct) | 1.7% (domestic) | A$0.30 | Shopify third-party fee may apply | WooCommerce, custom web applications, SaaS subscriptions |
| Afterpay | 6% via Stripe (varies by provider) | A$0.30 | Afterpay is a third-party app, so Shopify plan fees may apply | Retail, fashion, lifestyle goods with healthy gross margins |
| Stripe BECS Direct Debit | 1.0% (capped at A$3.50) | A$0.30 | N/A (B2B / Invoice payments) | High-ticket B2B transactions and recurring retainers |
Note that fees are subject to change and may vary based on promotional pricing or high-volume negotiated tiers. Rates shown reflect standard public Australian schedules verified in 2026.
Shopify Payments: The Default Choice for Shopify Merchants
Shopify Payments is Shopify’s integrated payment solution, built on top of Stripe’s financial infrastructure. Because it is natively embedded into the checkout flow, it offers distinct operational advantages for Australian retailers.
Eliminating third-party platform fees
Shopify applies an additional transaction fee whenever a merchant uses a third-party gateway instead of Shopify Payments: 2.0% on the Basic plan, 1.0% on the Grow plan, and 0.6% on the Advanced plan. If you choose to run direct Stripe or an external merchant gateway on a Basic Shopify store, you pay Stripe’s fee plus Shopify’s 2.0% surcharge, bringing your effective card fee close to 3.7% + A$0.30. Using Shopify Payments removes this surcharge entirely.
Integrated payouts and multi-currency
Payouts are reconciled directly inside the Shopify admin, matching orders with bank deposits without third-party dashboard hopping. In addition, Shopify Markets allows Australian stores to accept payments in foreign currencies (such as USD, NZD, GBP) while settling in Australian Dollars into your local bank account.
Stripe: The Benchmark for WooCommerce and Custom Builds
Stripe is an independent, developer-friendly payment platform that powers digital commerce globally. For Australian businesses running WooCommerce, custom Next.js web applications, or membership portals, Stripe is often the standard choice.
When Stripe is the right choice
- You operate on WooCommerce: On WooCommerce, there are no third-party platform fees, so Stripe’s transparent rate of 1.7% + A$0.30 applies directly without penalties. See our WooCommerce cost breakdown for full hosting and gateway budgeting.
- Complex subscription billing: Stripe Billing handles recurring retainers, metered usage, pro-rated upgrades and automated dunning notifications with greater flexibility than standard ecommerce checkouts.
- Alternative local payment methods: Stripe supports PayTo, BECS Direct Debit, and Apple Pay/Google Pay natively, giving B2B and trade companies low-cost payment alternatives for invoices exceeding A$1,000.
Afterpay: The High-Cost, High-Intent Conversion Trade-off
Buy Now Pay Later (BNPL) has widespread adoption in Australia, particularly in fashion, beauty, home goods and lifestyle retail. Afterpay allows customers to split purchases into four fortnightly instalments with zero interest if paid on time.
The merchant margin reality
While customers experience Afterpay as interest-free credit, the merchant funds the service through substantially higher transaction fees. Stripe publishes 6% + A$0.30 per successful Afterpay charge in Australia, and rates can vary by provider and agreement. On a A$150 order:
- A domestic card processed via Stripe at 1.7% + A$0.30 incurs A$2.85 in processing fees.
- An Afterpay transaction processed via Stripe at 6% + A$0.30 incurs A$9.30 in processing fees.
That is an additional A$6.45 deducted directly from your gross proceeds. If your gross margin is 60%, the fee is manageable. If your gross product margin is 20%, an A$9.30 fee represents almost a third of your A$30 gross profit on that item.
When to enable Afterpay
Enable Afterpay when your average order value (AOV) is between A$80 and A$300, your gross product margin is healthy, and your target demographic actively expects BNPL options at checkout. Review your analytics quarterly: if Afterpay simply replaces transactions that customers would have paid for with a standard debit card, you are sacrificing margin without generating incremental volume.
Australian Tax & Accounting Nuances
Australian merchants must account for Goods and Services Tax (GST) on payment processing fees:
- GST on processing fees: GST treatment is provider and fee specific. Stripe states that its published Australian card rates include GST, so a 1.7% domestic rate is already the GST-inclusive figure and should not have 10% added on top. Other providers may quote rates excluding GST, so confirm the basis in each provider’s current terms.
- Input tax credits: If your business is registered for GST with the ATO and the fee is a creditable acquisition, you may be able to claim the GST component as an input tax credit on your Business Activity Statement. Confirm eligibility with the ATO or your tax adviser.
- Price transparency under Australian Consumer Law: Under ACL regulations enforced by the ACCC, if you choose to surcharge customers for specific payment methods, the surcharge must not exceed your actual cost of acceptance, and headline prices displayed on the site must be inclusive of GST. Surcharging rules and card-network conditions can change, so check the ACCC’s current guidance before setting a surcharge.
Which Payment Stack Should You Choose?
- Starting a standard Australian Shopify store: Activate Shopify Payments as your foundation. Add Apple Pay, Google Pay and Shop Pay (which incur no extra fees). Hold off on BNPL until you establish baseline conversion metrics.
- Operating a growing apparel or lifestyle brand on Shopify: Use Shopify Payments plus Afterpay or Zip. Calculate your blended payment processing cost monthly to monitor BNPL margin erosion.
- Building a WooCommerce or custom trade website: Use Stripe direct. Add BECS Direct Debit or PayTo for B2B wholesale orders to avoid credit card processing fees on high-value transactions.
- Considering a platform migration: Review our guide to migrating from WooCommerce to Shopify to understand how gateway transitions affect checkout URLs and customer payment tokens.
Frequently Asked Questions
Can I use Stripe on Shopify without Shopify Payments?
Yes, but Shopify may charge an additional third-party transaction fee on top of Stripe’s standard processing fees, depending on your plan and the payment method used. The fee amount varies by plan, and Shopify’s current Australian pricing page is the source of truth. For many Australian Shopify merchants, using Shopify Payments directly avoids that surcharge and is more cost-effective, but confirm the current terms before deciding.
Does Afterpay increase ecommerce conversion rates?
In retail categories with consumer-discretionary purchases between A$50 and A$300, BNPL options can reduce cart abandonment and increase average order value. However, merchants must verify whether the lift in sales volume offsets a merchant transaction fee that can reach 6% plus a fixed charge.
Are payment gateway fees in Australia tax deductible?
Yes. Payment processing fees and merchant service charges are legitimate business operating expenses, deductible against taxable income. The GST component can be claimed back as an input tax credit if your business is GST-registered.
What is the cheapest payment gateway for small business in Australia?
There is no single cheapest gateway for every business. For standard domestic cards, Stripe and Shopify Payments publish transparent rates in the 1% to 2% band plus a per-transaction fixed fee, but the exact total depends on card type, currency, volume and plan. For large B2B transactions, bank-direct rails like BECS Direct Debit (1% capped at A$3.50 via Stripe) or PayTo can provide lower transaction costs than credit cards, provided the customer accepts bank debit.
Conclusion
Choosing the right payment gateway stack is a balancing act between buyer trust and operating margins. Default to integrated solutions that eliminate third-party surcharges, evaluate BNPL options against your gross product margins, and ensure your checkout flow works seamlessly on mobile devices where the majority of Australian ecommerce transactions take place.
For strategic guidance on structuring, building or optimizing an Australian ecommerce store, explore our Shopify development services or review our Shopify vs WooCommerce comparison.
