PayTo is up and running
Australia’s first payment service providers have started offering PayTo to their merchant and business customers.
Katrina Stuart, managing director of NPP Australia, believes PayTo will revolutionise the way bank accounts are used for payments.
Developed by NPP Australia in collaboration with financial institutions, fintechs and payment service providers, it’s anticipated PayTo will appear as a payment option for online, in-app and recurring payments in coming months as well as being a modern digital alternative to direct debit.
Stuart says the first payment service providers to offer PayTo to merchants and businesses in coming months include Azupay, Ezypay, Monoova, Paypa Plane and Zai who are all sponsored by NPP participant CUSCAL, and Zepto who will offer PayTo services as an NPP connected institution.
The first financial institutions to enable payer customer accounts in coming months include BankWest, Bendigo Bank, CommBank, Great Southern Bank, People’s Choice Credit Union, RACQ, and the Reserve Bank of Australia’s banking department.
It is expected that most remaining customers will have PayTo enabled on their accounts by April 2023.
“For businesses with a retail focus, large billers like utilities and government departments, PayTo will enable them to receive fast and secure payments from their customers’ bank accounts, as an alternative to cards or online payment options from international players,” says Stuart.
“PayTo removes uncertainty from the payment process and takes out inefficiencies such as dishonours and disputes, as well as greatly reducing the risk of fraud.”
Stuart says PayTo brings much better visibility and control over consumers’ payment arrangements, providing a far superior digital experience compared to the now outdated direct debit system.
“Businesses and corporates will also be able to use PayTo to authorise a third party to facilitate real-time payments on their behalf, such as payroll and accounts payable,” she says.
PayTo works by enabling a merchant or business to establish a “PayTo agreement” with a customer, outlining how much, and when, the customer agrees to pay for goods and services.
Customers authorise a PayTo agreement in their internet or mobile banking, making it a secure option for the customer. Merchants and businesses get the benefit of upfront validation that the customer’s account details are correct at the time a PayTo agreement is authorised. These agreements are then stored within a customer’s internet banking or mobile banking app where they can be viewed and managed.
When a payment is initiated, PayTo checks upfront for adequate funds in the paying customer’s account, reducing rejected payments and manual exception handling.
“PayTo is set to vastly improve the payments landscape in Australia for businesses and consumers alike, removing uncertainty from the payments process while greatly reducing inefficiencies and fraud,” says Paul Byrne, CEO of Zai, one of the first companies in Australia to offer PayTo for businesses and the very first to waive fees for the first 12 months to encourage adoption.
“This is also a starting point for further innovations, such as solutions for subscription-based business models that collect payments on a recurring basis, allowing consumers to turn subscriptions on and off via their bank accounts.
“It’s also a key milestone in further automating payments in business, allowing e-commerce companies to receive payments in near real-time and do more with their existing resources.”
Byrne adds: “Though there may be slow uptake at first as the rollout begins, we are hopeful that we will see much broader adoption over the next year as more payment service providers come on board.”