Welcome to the fourth and final installment on our blog series on the New Payments Platform (“NPP”) in Australia.
In this series, we have explored the following:
- Unlocking the NPP: SAP Capabilities for Faster, Smarter Payments
- Unlocking the NPP: Payments overview
- Unlocking the NPP: PayID
- Unlocking the NPP: PayTo — you are here
Now let's turn to PayTo, the smarter way to manage recurring payments.
Managing recurring payments and client authorisations can feel like navigating a maze of paperwork, delayed confirmations, and frustrated clients. The traditional direct debit system has long been a necessary but cumbersome tool, but what if there was a better way, one that puts control in your clients' hands while streamlining your payment operations?
The answer is PayTo: Australia's next-generation payment solution built on the New Payments Platform (NPP). This innovative system is transforming how businesses request and receive payments.
What is PayTo?
PayTo is a digital payment agreement that allows businesses to request funds directly from a customer's bank account with their pre-authorisation. Unlike traditional direct debits that operate behind the scenes, PayTo puts transparency and control front and center.
- Customers can use their PayID or BSB and account number to make payments.
- Merchants and businesses can set up a PayTo agreement for one-off, ad hoc, or regular payments.
- The PayTo agreement includes all relevant payment terms, which must be authorised through the customer's banking channel.
- Customers gain greater flexibility to view and manage all their payments in one place.
Steps involved in the PayTo process:
PayTo agreement creation: Businesses set up a PayTo agreement(PayTo Mandate) through their financial institution or payment service provider, recording the customer's authorisation for future payments.
Approval: The customer receives a real-time notification through their secure banking channel to approve or reject the agreement.
Management: Once approved, both parties can manage the agreement through their respective platforms, with payments initiated according to the pre-authorised terms.
PayTo agreement creation
When a customer signs up for a PayTo arrangement, the agreement creation flows through the NPP infrastructure, involving the business, a PayTo Provider, the payer and their respective bank. The diagram below illustrates how this mandate creation works end-to-end.
PayTo payments initiation
Once a PayTo agreement is in place, the business(biller) can initiate payments at any time according to the agreed terms. The payment flows through the NPP infrastructure using ISO 20022 messaging standards, ensuring real-time clearing and settlement between the Payer's and Payee's banks.
What information is exchanged?
PayTo uses ISO 20022 message standards to structure the data flowing between parties. The table below provides an overview of the information sent and received when creating a PayTo agreement, initiating a payment and processing the the bank statement.
Note: The fields above are based on the ISO 20022 messaging standard. In practice, each bank defines its own specific requirements for both payment file content and bank statement. So the exact fields, formats, and optionality may vary depending on your financial institution.
Why businesses are wanting to move to PayTo?
PayTo offers compelling advantages over traditional payment methods.
Real-time authorisation: No more waiting days to confirm whether a client has accepted a payment arrangement. Clients receive instant notifications and can approve agreements on the spot, dramatically reducing setup time.
Flexible payment structures: PayTo supports fixed amounts, variable payments, one-time transactions, and recurring payments, making it adaptable to virtually any billing model.
Simpler identification: Integration with PayID means clients can authorise payments using their Australian Business Number, email address or mobile number, eliminating the need to share BSB and account numbers.
Security and compliance built in: Every agreement requires explicit customer authorisation through their bank's secure channel. Customers have full visibility and can pause or cancel agreements at any time which helps build trust and significantly reduces the potential for disputes.
The bigger picture
PayTo isn't just a technical upgrade, it's a shift in the relationship between businesses and their clients. By giving customers real visibility and control over payment agreements, businesses can reduce friction, build stronger trust, and spend less time chasing confirmations.
If your business relies on recurring payments, PayTo is worth exploring. It's the direct debit experience, completely reimagined for the digital age.
Interested in exploring PayTo with SAP?
SAP is actively engaging with customers as part of a dedicated PayTo Customer Engagement Initiative. This is your opportunity to work directly with SAP to shape how PayTo is implemented, share your requirements, and influence the solution roadmap.
If your organisation is looking to modernise its payment processes and wants to be part of the conversation, we would love to hear from you.
Join the PayTo Customer Engagement Initiative Registration closes on the 21st of June 2026.
