Direct Debit has been around in Australia for many years now. With the fast-moving world we live in today though the traditional bank account-to-account payment system is no longer catching up. The two to three business days a payment takes to go from one bank account to another doesn't meet the cut anymore.
That's why NPP, in partnership with the financial services industry, is coming up with a new revolutionary way to solve this issue and several others that Direct Debit comes with.
This new payment system will allow for instantaneous payments transfer between bank accounts. It will solve the lagging issues individuals and businesses struggle with daily.
So, what exactly is PayTo? How does it work? How can businesses and individuals benefit from using it? In the lines to come, we will shed light on these questions and dive deep into the ins and outs of PayTo.
Without further ado, let's get started.
What is PayTo?
PayTo is a newly developed Australian financial service that's expected to see light in mid-2022. PayTo allows mandated and real-time account-to-account payments exchange between businesses and customers.
PayTo is not just another alternative to the traditional Direct Debit system though. PayTo goes way beyond that. In a traditional Direct Debit system, to link a bank account with an online merchant for one-off purchases or recurring payments, like utility bills and various memberships, a direct debit authority is needed every time you initiate a payment.
With PayTo, the whole process is automated. Your payment authorizations to merchants are stored in one place. These authorization records are easily accessible via PayTo's mobile app. Through the app, you can view, change, or discontinue an agreement with a merchant.
In addition to that, since PayTo works in conjunction with PayID, customers can make payments online without filling in their bank account details. All they need to initiate a payment is a PayID, which could be an email address, a mobile number, or an Australian Business Number.
How does it work?
PayTo acts as a bridge between a merchant and a customer. It facilitates the transactions happening between the two. Before automating the payments between the merchant and the customer, they must first agree on certain payment terms. The agreement gives the merchant a mandate, which pre-authorizes the merchant to request payments from the customer's bank account automatically. The customer, in turn, has full control over the agreement. The customer can pause the agreement, resume it or cancel it whenever they feel like they no longer want it.
How can businesses and individuals use PayTo for a better account-to-account payment transfer?
PayTo has a lot of beneficial uses for both businesses and customers. Let's explore a few of them.
There are five main ways businesses can use PayTo to boost their performance. They are as follows:
● PayTo validates the customer's account in real-time. Failing to validate a customer's bank account details will lead to theft, fraud, and extra unnecessary charges for the company. PayTo solves this through instant account validation of the customer as soon as the payment is initiated.
● Funds show up in the business's bank account instantly. Slow pay processing time is another issue a lot of businesses struggle with. With PayTo, the payment will pop up in the business’s bank account as soon as the customer pays the bill.
● PayTo confirms and verifies a payment as soon as it is initiated.
● Real-time notifications alert the business in case a customer changes or cancels an agreement.
● PayTo stores the agreements' records in one place for ease of use and makes sure they are secure and easily accessible for accounting purposes.
For individuals, PayTo can be used daily for one-off or regular payments. Here are a few uses of PayTo for customers:
● PayTo offers customers the ability to fully control mandates from one central location. From the app, customers can easily access mandates, change them or cancel them at any time.
● PayTo offers customers the set-and-forget option for recurring bills and subscriptions.
● With PayTo, customers will also be able to set up the service and pay for goods and services online without using their financial details.
PayTo will revolutionize account-to-account payments. With instant transaction processing, full control of mandates, and the extra layer of protection it comes with since payments can be made without a person's bank account information, PayTo will make it easier for businesses to collect funds from their customers and for customers to make online purchases quickly and securely.
PayTo vs Debit Payment: which one is better?
PayTo will offer businesses a modern alternative to the current Direct Debit. They can use it as a payment method for various services, especially subscriptions and in-app purchases. These services require scheduled payments, which the traditional Direct Debit system doesn’t offer. They can also use the system to give third-party services the right to make payments on their behalf, like account payables and payrolls. PayTo can be used alongside the current Direct Debit system too. This is good news for businesses that prefer to use both systems.
Conclusion
PayTo will come up with solutions for the issues many fast-growing businesses are struggling with nowadays. With the current transition to online shopping, the need for a service like PayTo has grown tremendously.
With PayTo, a business no longer has to wait three days for a payment to hit its bank account. The payment, once it is initiated by the customer, gets verified and cleared out instantly. This will improve the company’s cash flow and help it cut down on expenses that would otherwise go towards solving the many problems resulting from payment delays, cancellations, and disputes.
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