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PayTo is an update to the existing direct debit system, where merchants can pull funds directly from a customer’s account. There are notable upgrades in the PayTo system, which transacts in near real time and doesn’t require manual ABA file uploads.

Comparison of PayTo and Direct Debit

PayTo Direct Debit
Who controls the agreement? Customer controls the agreement, with ability to pause, change, or cancel the contract Merchant owns the agreement
Where is the agreement held? The agreement is hosted in the customer’s banking app (which means they must be with a banking provider who offers PayTo) Merchant stores the agreement in their systems
Process API-based Manual ABA file upload to merchant’s bank
Transaction speed Transactions are in near real-time Transactions take T+3 days to clear (or T+2 if you’re with Monoova!)
Fixed or variable sums Fixed and variable sum Fixed and variable sum
Suitable for online checkouts Can be used for ecommerce and checkouts Not compatible for ecommerce and checkouts
Account validation Validates an account has the necessary funds before withdrawing No validation of funds, resulting in possible overdrafts or rejection of payment
Link to loyalty programs Merchants can link their loyalty programs with PayTo payments No link to loyalty programs
Fees Flat fee structure Flat fee structure

Adoption of PayTo

PayTo is gaining recognition and understanding as more consumers and businesses discover its benefits. It’s most known for being the preferred replacement for BECS Direct Debits, which will be phased out by 2030. However PayTo also supports a wide range of use cases including account funding, recurring billing, checkout, in-app payments and more.

The experience with PayTo may vary depending on the bank, a search bank brings its own approach to setting up a PayTo agreement. Here’s a general guide to how a PayTo agreement happens:

Step 1: A consumer selects PayTo as their payment option on an online checkout, or by scanning a QR code setup by the merchant

Step 2: The consumer provides their PayID or BSB and account number to the merchant

Step 3: This is where it gets tricky, as the exact process will change from bank to bank. In most instances, the consumer will receive a notification for their banking app on their phone, which will take them to the agreement and guide them through how to approve it.

The agreement will include the approved amount, frequency, and other conditions of any payments.


Which banks offer PayTo?

For consumers, PayTo is currently available through the online banking platforms of 50 major banks, financial institutions, and credit unions. PayTo is gradually being rolled out for businesses.

Most of the major banks that have PayTo enabled:

Some credit unions also have PayTo enabled for their accounts. See the full list of banks live with PayTo.

Consumers control PayTo agreements

The second thing to keep in mind is where it deviates from how a Direct Debit agreement works. Traditionally, if a consumer has set up a direct debit agreement with a provider, they’re not able to just stop paying or cancel the agreement without following the merchant’s process. This has provided merchants with a layer of protection and assurances, as well as giving them a strong cash flow forecasting ability.

With PayTo, consumers are able to pause or cancel agreements – but that’s not to say they’re within their rights to pull the rug out from under merchants.

There are ways to protect yourself as a merchant. Layering PayTo agreements over Direct Debit agreements means there’s a “fall back” option should the PayTo agreement be cancelled without the merchant being informed.

Example of a PayTo payment agreement

PayTo with Monoova

Monoova’s API based payment solution offers additional benefits to PayTo. All PayTo transactions facilitated by Monoova are automatically reconciled as they happen – no more end of month manual reconciliation.

What’s more, if a consumer does alter or cancel the agreement in any way, merchants receive real-time notifications of that change. Notifications will also inform merchants if a consumer’s account doesn’t have enough funds to cover the payment, prompting them to get in touch. For some industries where the merchant has an obligation to assist customers experiencing financial hardship, this can be a huge help in preventing them from being charged overdraft fees when a direct debit withdraws from their account.

Direct Debit with Monoova

In the comparison table above, you may have noticed we mentioned Direct Debit is transacted a full business day faster with Monoova. Of course, that’s not the only trick we have up our sleeve there. With Monoova, merchants are able to customise the merchant name displayed on a customer’s bank statement, replace their manual ABA file uploads with an API-driven process, and get instant notifications when a payment fails so there’s no searching for a needle in a haystack days after it’s failed.

Manage PayTo and Direct Debit agreements from one place

Consumers expect more payment options than ever before, and it makes for a great customer experience. It does however make things a little harder for merchants when they must manage multiple payment providers just to have that selection available.

Simplify your processes while giving your customers more choice by switching to Monoova. Not only will you unlock access to real-time payments with PayTo and manage it from the same places as your Direct Debit transactions, you’ll also have the option of adding cards, digital wallets, BPAY, and PayID to your payment options (and managing them all in the same place – Monoova!).

Get in touch with our team to set up PayTo for you business.

Monoova Payments  Pty Limited (ACN 126 015 227 | AR No. 428863) trading as Monoova (Monoova) is the authorised representative of Monoova Global Payments Pty Ltd (ACN 106 249 852 | AFSL 421414) (Monoova Global), being the issuer of the Combined Financial Services Guide & Product Disclosure Statement Non-Cash Payment Products and Services (FSG/PDS). Copies of the FSG/PDS and the terms and conditions of the products and services offered by Monoova and Monoova Global (disclosure documents and terms) are available by contacting Monoova at support@monoova.com. You should consider the relevant disclosure documents and terms before deciding whether to acquire, or continue to hold, the product or service. The information provided on this website is factual information, is given in summary form, and does not purport to be complete. The information set out does not take into account your particular investment objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information having regard to these matters, and in particular, you should seek independent legal, financial and tax advice.

©Monoova

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