A new joint report by Square and the Council of Small Business Organisations Australia (COSBOA) highlights that small businesses embracing digital tools are achieving significant gains in productivity, sales, and economic contribution.
Small enterprises account for over 97 per cent of Australian businesses, employ more than 5 million Australians, and contribute upwards of $589 billion to the national economy.
The “2025 State of Small Business Report”, issued by Square in partnership with COSBOA, draws on data from over 500 small business owners and Square’s transaction analytics. It indicates that tech-enabled sellers outperform their less digitised counterparts—Square users process 94 per cent more sales volume, while those with API integrations handle 2.6 times the sales and nearly twice the number of transactions.
Digital tools driving productivity gains
Technology is clearly a powerful lever for enhancing productivity—streamlining administration, accelerating sales, and improving customer engagement—allowing business owners to work smarter, not harder.
At Jayden Ong Wines in the Yarra Valley, manager Morgan Ong said the ease of use has been a major benefit. “Being able to onboard staff quickly with Square’s user-interface has meant I can focus more on details of service rather than on mastering new technology. It’s a big time-saver.”
Although 85 per cent of small businesses currently use at least one digital tool, investment remains cautious: most businesses planning technological upgrades expect to spend under $5,000 in the year ahead. Many small business operators cited the need for more practical training, tailored support, and affordable digital solutions.
Small changes, big impact
Square’s Executive Director for Australia, Marco Lamantia, explained that the most meaningful productivity gains come not from sweeping change but from steady, incremental improvements. “Productivity gains come from small, consistent improvements, not big overhauls. It’s about tools that reduce friction, remove repetitive tasks, and give time back to focus on what really matters. That’s what we’re building at Square – technology that fits around how small businesses work, giving them time back to grow and focus on their craft.”
The report coincides with interim findings released by the Productivity Commission, which suggest that boosting digital adoption—through improved data access, AI, and business technology—could significantly enhance national productivity.
COSBOA Chair Matthew Addison reinforced that message, warning that businesses relying on pen and paper are now at serious risk of being left behind. “Technology is no longer optional. The State of Small Business Report and Productivity Commission both make it clear that digital adoption is critical for lifting Australia’s productivity. Small businesses that embrace modern tools are more efficient, more competitive, and more resilient. This is not just a business decision. It is an economic imperative.”
Customers leading the cashless shift
Changing customer behaviour is also accelerating the digital shift. More than three-quarters of surveyed businesses reported that most of their transactions are now cashless, and Square data points to rapid growth in tap-to-pay mobile payments—particularly among micro and service-based sellers prioritising speed and agility.
As Australia navigates complex economic conditions, the productivity of small businesses remains central to national recovery. With the right digital tools and support, these businesses are not simply keeping pace—they are forging ahead.
