Technology adoption is linked to stronger small business productivity, sales, and economic contribution, according to a new report from Square and the Council of Small Business Organisations Australia (COSBOA).

The 2025 State of Small Business Report reveals that small businesses embracing digital tools are running more efficiently, selling more, and setting the pace for stronger economic performance across the country.

Drawing on survey data from more than 500 small business owners and Square’s transaction insights, the report shows that tech-enabled sellers are consistently outperforming those that have not yet digitised. Sellers using Square’s software tools process 94% more in sales volume than Square sellers who don’t. Businesses with API integrations process 2.6 times more in sales and nearly twice the number of transactions.

According to COSBOA Chair Matthew Addison, the shift to digital is not just a recommendation, it is a necessity.

“Technology is no longer optional,” he said. “If you are still relying on pen and paper to run your business, you are at serious risk of being left behind.

“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.”

While 85% of small businesses are already using at least one digital tool, the report shows investment is still cautious. The majority of businesses planning to upgrade technology expect to spend less than $5000 in the next year. Many cite the need for practical training, tailored support, and affordable solutions.

The report also highlights how customer behaviour is accelerating the shift. More than three-quarters of surveyed businesses now say most of their transactions are cashless. Square data shows rapid growth in tap-to-pay via mobile, particularly among micro and service-based sellers who rely on agility and speed. “This report reinforces what we hear from sellers every day. Productivity gains come from small, consistent improvements, not big overhauls,” said Marco Lamantia, Executive Director of Square Australia.