What is PayTo & How Does It Work?

November 15, 2021

What is PayTo?

PayTo transactions are the next big thing in the Australian payments landscape. It will enable a new way to pre-authorise payments from consumer or business bank accounts.

How it works?

PayTo consists of

  • Payment initiation message capability. This is used by third parties to request payments from a customer’s bank account. Those payment requests are associated with a customer authorised payment arrangement, a ‘mandate’
  • A centralised database for creating, storing and maintaining mandate records. This is owned and operated by NPP Australia
  • Associated business rules. These provide assurance that the payment initiation messages will be acted upon by the customer’s financial institution. (NPPA, 2020)

What are the Use cases for PayTo?

1. In the simplest form, PayTo transactions are real-time direct debits. With normal batch-based direct debits you might wait for days for the money you debited your customer to arrive – or maybe to be told that it wasn’t available. With PayTo, money is debited, settled and cleared instantaneously. No need to wait.

2. As an extension, PayTo can be used to fund large disbursements exactly when they are needed rather than hours or days earlier. Your payroll, for instance. No need to have a large float sitting with your payroll provider for more than a few moments before you pay your staff.

3. And it gets more exciting. PayTo allows for the initiator of the transaction and the receiver of the transaction to be different entities. Unlike today’s direct debits, your company could instruct someone like Monoova (the initiator) to debit funds from your customer and credit a third-party bank account without ever touching the funds themselves. For custodial services and similar, this means that you can automate transactions between accounts without third party ‘interference’.

4. Finally, with a real-time direct debit, there is an alternative to scheme card dominance in eCommerce. Why pay expensive merchant service fees and wait for a day for funds to settle when you can get something that is both faster and cheaper?

What Are the Benefits of PayTo for me & my Business?

Business Benefits

Authorised third parties will use PayTo to initiate payments have access to a range of features;

  • Real-time validation of the customer’s account at the time of mandate creation
  • Real-time funds availability check (at time of payment)
  • Real-time confirmation of payment
  • Real-time response on payment instruction
  • Receive notifications of changes to mandate status, e.g. if mandate is cancelled or suspended
  • Centralised storage of mandate records
  • Data-rich capability with more data included in the payment message
  • Ability to support more seamless, digitised and efficient process (NPPA, 2020)

Customer Benefits

PayTo creates a more digital and enhanced customer payments experience.

  • Customers can digitally authorise/view/modify/manage the mandates they have given for third parties. These third parties then initiate payments from their bank account. Customers can easily move their mandate payment arrangements from one bank account to another account at a different financial institution.
  • Customers have increased visibility and control over their various payment arrangements and madate payment arrangements linked to their account.
  • Customers have more control over their account and can more easily perform mandate maintenance functions, e.g. cancel a mandate.
  • Customers can also use PayID when setting up Pay To arrangements on their account rather than using their BSB and account number. Customers can also easily move mandate payment arrangements linked to their account to an account held at another bank.
  • PayTo also provides a more digital, user-friendly customer experience. Banks can also choose to optionally deliver additional notifications to customers regarding their upcoming payments.

Get in contact with us.


Monoova Payments Pty Ltd (ABN 38 126 015 227) trading as Monoova (“Monoova”) is the authorised representative of Monoova Global Payments Pty Ltd (ABN 77 106 249 852; AFSL No. 421414 ), the issuer of the Combined Financial Services Guide & Product Disclosure Statement Non-Cash Payment Products and Services dated 20 September 2023. (FSG/PDS). This information is given in summary form and does not purport to be complete. To the maximum extent permitted by law, Monoova does not assume responsibility for, the content, accuracy or completeness of the information presented. Before acting on any information you should consider the appropriateness of the information having regard to these matters and seek independent legal, financial and tax advice. To the extent that the information contained above is sourced from third parties or provides link to third party websites, Monoova takes no responsibility for the accuracy, currency, reliability and correctness of any information included in the material provided by third parties nor for the accuracy, currency, reliability and correctness of links or references to information sources (including internet sites) operated by third parties.

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