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PayTo: Australia’s new face of digital payments. Is your business ready?

Australia’s businesses are evolving, and so is its payment infrastructure. New payment methods are gradually replacing cash, and technology is largely responsible for this change. 

These new methods are ideal for the modern Australian lifestyle, which values convenience and speed. What we are seeing today may surprise many if they could travel back in time just ten years to learn how people used to make transactions back then.

Due to newer technologies, the way people spend and send money has changed dramatically over the last three decades. 

Account to account transfers funds between accounts without additional intermediaries or payment instruments. This payment method is standard and is used in various daily activities, such as businesses using direct debit platforms to collect recurring payments or individuals transferring money to a friend using self-banking services.

However, many experts believe that account-to-account payments will become a standard part of the financial infrastructure of every fast-moving business by 2022.


The answer is a new method of pre-authorizing payments from bank accounts. PayTo, formerly known as the Mandated Payments Service, is a payment infrastructure that benefits merchants and their interactions with customers and with one another. 

After its expected implementation, businesses will be able to use this new payment infrastructure to start real-time payments from a customer’s bank account, comparable to a real-time, digital direct debit. 

PayTo goes live from July 1, 2022.

It will help third parties such as fintech, payment service providers, and merchants. PayTo will be integrated into their present service offerings, allowing them to increase their possibilities.

Simply put, PayTo will enable retailers to make instant payments from their customers’ bank accounts while allowing customers to link their bank accounts to apps, account-on-file arrangements for eCommerce and subscription services, loan repayments, and membership fees, digital wallets, and payment options like buy-now-pay-later services.

An inside look: Australia’s evolving payments ecosystem

Technology, particularly the internet, has impacted every industry, so it is no surprise that it is shaping the future of how people interact with money.

According to FIS’s 2022 Australian payments report, digital wallets will be the primary way Australians pay for goods in 2025. Furthermore, like many other nations, Australia will become cashless by 2025, with the eCommerce market expected to grow by up to 51% between 2021 and 2025.

Furthermore, Buy Now Pay Later (BNPL) is expected to account for 14% of eCommerce transaction value by 2025. According to a Global Payments Report, the BNPL industry was worth 14.3 billion US dollars in 2021. (Full report: Digital Buy Now Pay Later & ePOS Finance: Market Outlook 2021) and (Global Payments Report)

3 Things everyone should know about PayTo

Carolyn Breeze, Chief Commercial Officer at real-time payments provider Zepto, discusses three points with Dynamic Business that everyone should be aware of before the July launch.

Reduced reliance on credit cards 

Carolyn claims that the most significant and common disadvantage of credit card payments is the conflicting costs. Businesses spend time and money correcting payment failures and additional merchant services, interchange, and processing fees.

To know about Payto for business

“As technology advances, so do payments—barter, cash, cheque, card. As one payment method goes, another comes in. And just like cards rivalled cheques, she explains that account-to-account payments like PayTo will challenge credit cards.

“Currently, Direct Debit payments have longer payment confirmation times (usually between 1-3 days), and even with the risk of fraud, failed payments and higher costs, merchants will fall back on credit cards for this very reason.

“PayTo exists to eliminate these pains by modernising and simplifying how bank accounts are used. Businesses will get real-time confirmation of available funds and payment at the transaction time and notifications at various stages of every payment, removing the uncertainty of traditional direct debit. PayTo supports a range of different recurring payment use cases, including fixed or variable payment amounts and payment frequencies. 

“For payers, PayTo payments offer the speed of credit cards, combined with the security and control of Direct Debit, giving consumers a reason to avoid the credit card debt trap.” 

Decreased risk of fraud 

Because these payments frequently require instant authorisation and visibility, current Direct Debit rails increase the risk. With PayTo, businesses will get real-time payment verification, but they will also get real-time customer account validation.

“PayTo serves as a solution to bounced payments, providing a reliable way to guarantee a payer’s identity by asking them to log in and approve debits from their bank account,” Carolyn says.

“PayTo allows customers to have full visibility and control over the payment arrangements, which are pre-authorised within a payer’s usual internet or mobile banking app. Pause, resume or cancel – the payer and payee have control and visibility of all transactions. 

“It’s important to know that merchants will not have access to customer bank accounts. Connected Institutions will facilitate all transactions, for example, instant payments provider Zepto which is also accredited as a Consumer Data Right data recipient.” 

Streamlined and smarter payment systems 

“Businesses adopting the PayTo infrastructure will not only gain access to reliable and transparent transactions but can also unlock admin efficiencies, explains Carolyn.

To know about PayTo for customers

“Merchants will have access to a brand new infrastructure that offers data-rich transactions, with more data included in the payment message than current payment methods and centralised storage of mandate records. 

“Another asset to businesses will be that the payment initiator and the receiver can be from different entities. Unlike today’s direct debits, businesses could instruct the initiator to debit funds from a customer and credit a third-party bank account without ever touching the funds themselves. This means that you can automate transactions between accounts, straight from your customers’ accounts to yours, without third party ‘interference’. 

“As PayTo allows for money to be debited, settled and cleared instantaneously with no need to wait, it supports businesses by giving the ability for more seamless, digitised and efficient processes. No longer will your business float need to sit with your payroll provider for days on end, PayTo can be used to fund large disbursements exactly when required rather than hours or days earlier.

“Fractured payment systems that keep money unnecessarily tied up can be detrimental for businesses and consumers.”

PayTo will be available from mid-2022, with more information via the NPPA website. 

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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