PayTo is a relatively new digital payment method that allows customers to authorise payments directly from their bank accounts. Introduced in 2022 as part of the New Payments Platform (NPP) initiatives, PayTo represents a major step in modernising Australia's payment solutions. As of early 2026, 128 million PayTo accounts have access to the NPP-facilitated.

As long as businesses have suitable accounts at Australian banks that enable PayTo, they can use it as a payment option. PayTo gives users enhanced control over payment management – including bills, subscriptions, and one-off payments – with features that allow them to view, authorise, pause, or cancel their PayTo payment agreements through the security of their banks' digital platforms.

What's in this article?

• How does PayTo work?
  
• Where is PayTo used?
  
• Who uses PayTo?
  
• Benefits of accepting PayTo
  
• PayTo security measures
  
• Accepting PayTo as a payment method
  
• Alternatives to PayTo
  
• How Stripe Payments can help
  
• FAQs about PayTo
  

How does PayTo work?

Here are the steps to the payment process via PayTo:

• PayTo access: To access PayTo, a business needs to be sponsored as a PayTo User. This involves consulting its bank, financial institution, or payment-service provider (PSP) to enable PayTo capabilities. Once it's officially sponsored, it'll be able to initiate payments from all accounts suitable for PayTo on the NPP in Australia​​.

• PayTo agreement: When the business wants to initiate a sale with PayTo as the payment method, it creates a PayTo agreement that details the terms for debiting a customer's account. These terms include the amount, frequency, and duration of payments, and they could be for one-off, ad hoc, or recurring payments​​​​.

• Customer authorisation: The PayTo agreement is then sent to the customer's bank, building society, or credit union and will appear in the customer's internet or mobile banking app for authorisation. The customer needs to review and approve this agreement for the payment to be processed.

• Payment initiation: Once the customer authorises the agreement, the business can start debiting the customer's account according to the payment terms. PayTo conducts real-time validation of the customer's account at the time of mandate creation as well as a real-time funds availability check at the time of payment. This provides the company with immediate confirmation of the transaction's success or failure​​​​. There are also associated business rules to ensure that payment initiation messages are acted on by the customer's financial institution​​.

• Changes to PayTo agreements: The business receives notifications when the customer pauses, changes, or cancels the PayTo agreement. It can also amend, pause, resume, or cancel the agreement as required​​​​.

• Mandate records: PayTo has a centralised database for creating, storing, and maintaining mandate records, which is owned and operated by NPP Australia.

Where is PayTo used?

PayTo is used in Australia to manage both one-off payments and recurring payments such as subscriptions, online or in-app purchases, payroll, and accounts payable. In 2025, online payments constituted about 20% of all consumer transactions in the country, which shows there's high demand for digital payment methods such as PayTo.

PayTo addresses many of the challenges associated with traditional direct debits with features such as real-time validation of customer accounts, funds availability checks, and instant confirmation of payments. It can be used for in-app and e-commerce transactions, as well as electronic invoice payments. This helps businesses get paid faster and can improve the procure-to-pay process​​. As an always-on service, PayTo also supports outsourced functions such as payroll and accounts payable, enhancing overall business operations​​ and eliminating the need for large floats with payroll providers​​.

Who uses PayTo?

In Australia, the following types of businesses use PayTo to improve their payment processes:

• Businesses and billers: PayTo is ideal for businesses and billers that need a reliable, efficient way to collect payments. It's particularly useful for those that require a modern alternative to traditional direct debit methods​​​​ and also supports in-app and e-commerce transactions, making it an ideal solution for businesses that require a digital payment system. These businesses can use PayTo for one-off or ad hoc payments or to maintain an "account on file" for customers​​.

• Payment-service providers (PSPs): PSPs can integrate PayTo as an advanced payments service for their business clients. Payment gateways and processors that want to provide a more efficient payment solution might find PayTo especially helpful​​.

• Outsourced service providers: Third parties and accounting software providers that manage outsourced processes such as payroll and accounts payable can use PayTo to simplify these functions. PayTo's always-on feature ensures continuous, real-time payment processing.

• Financial services companies: Trading, investing, and banking platforms can use PayTo for its instant funds transfer capability. This enables immediate trading, which is important in the fast-paced environment of stocks and cryptocurrencies​​.

• Remittance companies: Businesses involved in currency conversion and remittances can use PayTo's immediate funds transfer function as a way to reduce market exposure and speed up the remittance process.

• Proptech companies: Property technology companies can use PayTo for faster, more reliable payment collection, increasing the efficiency of their financial operations​​.

Benefits of accepting PayTo

PayTo offers many benefits to businesses when compared to other payment methods:

• Real-time customer verification: Businesses that use PayTo benefit from immediate confirmation of customer account details and funds availability at the time of payment. This reduces the likelihood of failed transactions, chargebacks, or disputes due to insufficient funds or incorrect account details.

• Faster transactions: Unlike traditional direct debit payments, which can have a response time of up to three days, PayTo processes payments in real time. This means businesses can receive payments much faster, enhancing cash flow and operational efficiency.

• Instant payment notifications: PayTo notifies businesses in real time about transaction status changes, including when customers modify, pause, or cancel their payment agreements. This feature keeps businesses informed and enables quick responses to payment status changes. PayTo also provides real-time customer and funds verification, along with notifications at every stage of the payment cycle.

• Customer validation: PayTo requires customers to accept payment agreements in their banking apps before billing can commence. This additional step increases the security of transactions by ensuring customer consent and reducing the risk of unauthorised debits.

• Payment data: PayTo's rich data capability allows businesses to simplify their accounting and reconciliation processes. Detailed transaction information helps match payments with their respective invoices or agreements.

• Uninterrupted service: Traditional banking systems might not process payments outside of business hours or during holidays. PayTo, however, offers continuous, uninterrupted payment processing services, including on weekends and public holidays.

• Simplified sign-up process: Businesses need to be sponsored as PayTo Users by their banks, financial institutions, or payment-service providers, but signing up for PayTo is completely digital and paper-free. It's typically a more straightforward and user-friendly experience compared to traditional direct debit setups, which might involve paper-based forms.

• Customer self-service: Customers are able to manage their own PayTo agreements within their banking apps. This allows them to move agreements between bank accounts or financial institutions without interrupting billing or creating additional administrative work for businesses.

• Reduced transaction costs: PayTo is a cost-saving alternative to credit card payments, which typically come with high transaction fees.

• Strong security measures: PayTo's infrastructure is designed with security and regulatory compliance in mind, minimising the risk of fraudulent transactions and safeguarding sensitive financial data. This is a major improvement over traditional direct debit systems, which can be more vulnerable to fraud.

• Flexible payment features: PayTo allows businesses to customise their payment strategies to refine for speed, security, or cost. This flexibility is especially useful in sectors that value features such as instant payment notification and validation.

PayTo security measures

PayTo employs the following security measures to ensure the safety and integrity of its transactions:

• Payment authorisation: PayTo agreements are sent to the customer's internet or mobile banking app for authorisation, and a business can debit the account only in accordance with the payment terms that were agreed on.

• Advanced authentication: Because PayTo agreements go through the customer's mobile banking app, they benefit from banks' secure authentication practices to ensure the person who authorises a payment is the account's real owner.

• Encryption: NPP Australia manages a secure, encrypted database where PayTo agreements are centrally stored, safeguarding personal banking details against unauthorised parties that might try to intercept or decode this information.

• Continual security updates: Banks continually update their mobile banking security measures, which means the infrastructure through which PayTo functions remains up-to-date with the latest security protocols.

Accepting PayTo as a payment method

PayTo allows businesses to initiate real-time payments from their customers' bank accounts, but accepting PayTo as a payment method necessitates some setup.

Requirements for accepting PayTo

Businesses must either have a bank account with an Australian bank that has enabled PayTo or work with a payment-service provider (PSP) that offers PayTo as a payment option. A participating financial institution or PSP facilitates the funds transfer. An Australian Business Number (ABN) is also typically required to open a local business bank account.

How to start accepting PayTo

Whether a business is working with a bank or a PSP that accepts PayTo transactions, it must be sponsored by the relevant financial institution as a PayTo User. The business will then be able to initiate payments from its accounts that have been enabled for PayTo by creating PayTo agreements that detail the transaction terms, including the payment amount and frequency​​​​. Customers will need to authorise these agreements before any payment can be processed.

How Stripe can help you accept PayTo

Stripe can help simplify PayTo adoption by embedding it seamlessly into your existing payments infrastructure. By using Stripe to offer PayTo, your business can gain several operational advantages:

• Unified integration: You can activate PayTo directly from the Stripe Dashboard and display it alongside credit cards and digital wallets using Stripe Checkout or the Payment Element – no additional engineering required.

• Automated mandate management: Stripe handles the difficult tasks of creating and managing PayTo agreements. The flow automatically prompts your customers to securely authorise the mandates directly within their own banking apps.

• Instant reconciliation: Unlike traditional BECS Direct Debit payments, which can take days to clear, PayTo transactions settle in real time. Payments are instantly verified, mapped to the correct customer, and reconciled within the Dashboard.

• Simplified recurring billing: PayTo works natively with Stripe Billing. Once a customer authorises a mandate, you can easily pull funds for recurring subscriptions, usage-based fees, or instalment plans without requiring them to reauthenticate.

• Reduced fraud and chargebacks: Because PayTo payments require explicit authorisation from the customer through their bank's secure environment, the risk of fraudulent transactions and subsequent disputes is significantly lower.

Alternatives to PayTo

Companies in Australia can choose from multiple digital payment methods, depending on their specific business needs. Here are popular alternatives to PayTo.

BECS Direct Debit

BECS Direct Debit is an Australian bank transfer system commonly used for recurring payments. It allows businesses to collect authorised payments automatically and directly from customers' bank accounts and is popular for subscription services and recurring B2B transactions.

While the Australian payment industry initially planned to decommission the BECS framework by 2030 in favour of modern real-time rails such as PayTo, this hard closure date has been abandoned.

Regulators and financial institutions are currently developing a revised transition road map to ensure a smoother migration for businesses. However, despite the delay, businesses should consider adopting PayTo to take advantage of its real-time settlement, better mandate management, and reduced fraud risk compared to traditional BECS direct entry.

What PayTo improves over BECS

BPAY

BPAY is a popular bill payment system through which customers can make payments directly from their bank accounts. Integrating BPAY into an existing invoicing system allows businesses to receive payments directly.

Payment apps

Apps like PayID and Osko facilitate instant bank transfers, providing a convenient way for customers to make payments fast. Once a business registers a PayID and links it to the preferred bank account, PayID transactions send the money straight to the business's account.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, Stripe's consumer network.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payment performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments or get started today.

FAQs about PayTo