1
Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and Product, 2024.
Small and medium-sized businesses (SMBs) are the backbone of Australia’s economy. As the nation’s largest private sector employers, they contribute to 55% of the total GDP.1 For all their importance, however, SMBs face growing stressors that can stifle business growth and operations.
It’s well known that SMBs tend to be time-poor and that their owners and directors need to be masters of all. What’s less acknowledged is the financial stressors and security concerns facing Australian SMBs. PayPal’s eCommerce Index 2025 reveals just how challenging things have become for SMBs, uncovering shared eCommerce and business concerns that will set the tone for the year ahead.
From a financial perspective, 2-in-3 SMBs (67%) have lost out on potential revenue due to insufficient working capital, and 1-in-3 SMBs (30%) are now concerned with simply staying afloat and making a decent living, up 12% year-on-year.2 Online security is a growing concern too, with 71% more worried than they were 12 months ago.2 Changing consumer payment preferences – including the rise of buy now pay later (BNPL)2 – and the prevalence of social commerce are other areas drawing the attention of SMBs as they weather an increasingly complex digital economy.
Despite these challenges, the evolving landscape also presents significant opportunities for SMBs to adapt and thrive. Here are the three key concerns and priorities that Australian SMBs are focusing on to navigate the year ahead in 2025.
Security leads as the top eCommerce priority for 58% of SMBs, a 13% increase from 2024.2 This heightened anxiety reflects the growing challenges businesses face in protecting themselves and their customers from evolving cyber threats.
Among the key areas of concern, 37% of SMBs are troubled by the cost and complexity of staying ahead of cybercriminals.2 The threat of cybercriminals impersonating their businesses (34%) and the responsibility of safeguarding customer data (34%) also weigh heavily on businesses.2
In response to these challenges, 95% of SMBs have taken proactive steps to improve their data security, though only 29% of consumers trust Australian businesses to keep their details safe.2 This disparity highlights an ongoing need for SMBs to invest in robust security measures, and for businesses to effectively communicate these security efforts to their customers.
Working with a trusted payments partner like PayPal can help bridge the trust gap. PayPal is the most trusted online payment method among Australians, with 44% trusting PayPal the most to keep their payment secure and protect them should something go wrong with their online purchase. While 73% say they would trust PayPal, 64% of respondents have reported using PayPal within the last 6 months. PayPal Complete Payments comes with robust security and fraud detection capabilities to further safeguard businesses and their customers. By displaying PayPal banners and buttons across eCommerce websites, SMBs can help reassure customers that their transactions are safe and secure.
Attracting new site traffic has emerged as a critical focus for Australian SMBs in 2025 as they seek to drive growth and expand their customer base amidst a climate of reduced consumer spending.
While traditional strategies like social media promotion – already used at least weekly by 58% of SMBs2 – and search engine optimisation remain vital, many businesses are now leveraging the transformative potential of AI to stay ahead.
Australian SMBs lead globally in AI adoption, with 85% integrating AI into their operations and 88% reporting increased revenue as a result.3 AI-powered tools are enabling SMBs to create personalised content, offers and recommendations, helping them connect with their target audiences more effectively.
With 56% of consumers saying they’ll become repeat buyers after a personalised experience,4 AI tools can help Australian SMBs draw fresh traffic and convert site visitors into loyal customers.
With SMBs losing an average of $22,000 in revenue due to insufficient working capital,2 many face significant challenges when it comes to funding their growth. This lack of cashflow often creates a vicious cycle, where businesses are unable to invest in opportunities that could drive future revenue.
Despite these constraints, Australian SMBs remain resolute in their growth ambitions. PayPal research reveals that their top priorities for 2025 include introducing new products and services (47%) and optimising existing offerings (47%).2 Notably, nearly a third of SMBs (29%) indicate they would prioritise growth and expansion if they had access to additional financing.2
To support this ambition, SMBs can consider flexible business loan solutions like PayPal Working Capital. As an alternative to conventional bank loans, PayPal Working Capital can help eligible SMBs maintain a healthy cashflow to take advantage of growth opportunities.
Uncover the challenges facing Australian businesses, as well as key consumer trends you can take advantage of to strengthen your business by downloading your copy of the PayPal eCommerce Index 2025 report.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.
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