If you’ve been paying bills, subscriptions, or loan repayments in Australia, you’ve almost certainly used direct debit. But there’s a modern alternative gaining momentum: PayTo. Understanding the difference between these two payment methods matters—whether you’re a business deciding how to collect payments or a consumer wanting better control over your bank account.
This guide breaks down exactly how PayTo and direct debit work, where they differ, and what both Australian businesses and consumers should consider as the payments landscape shifts over the coming years.
Quick Answer: How PayTo Differs from Direct Debit
PayTo is a real-time, app-controlled digital alternative to BECS Direct Debit for authorised payments from Australian bank accounts. While direct debit has served Australia well since the 1970s, PayTo represents the next generation of account-to-account payments, built on modern infrastructure.
Traditional direct debit operates via the Bulk Electronic Clearing System (BECS), processing payments in batches with 1–3 business day settlement. Customers typically authorise these payments through paper forms or online signup, providing their BSB and account number to a merchant who stores the mandate. Once set up, customers have limited visibility and control—changes usually require contacting the business or bank directly.
PayTo runs on the New Payments Platform (NPP), which processed 1.2 billion transactions in 2024 and supports over 25 million PayID registrations. This infrastructure enables instant payments, in-app authorisation through your banking app, and live management of all your payment agreements in one place.
Four key differences at a glance:
- Speed: PayTo settles in real time (under 15 seconds) versus 1–3 business day batch processing for direct debit
- Control: PayTo agreements are managed in your mobile banking app versus paper/online forms stored by merchants
- Visibility: See all active PayTo agreements in one dashboard versus tracking debits through bank statements
- Security: Bank-grade authorisation with multi-factor authentication versus merchant-held mandate details
PayTo is part of Australia’s NPP roadmap, with BECS Direct Debit currently targeted for retirement around 2030. This means businesses are already planning their shift, and consumers should expect to see PayTo options appearing more frequently.
What Is Direct Debit in Australia?
Direct debit is the long-standing payment method Australians use for recurring payments like insurance premiums, utilities, gym memberships, and loan repayments. It’s been the backbone of automated billing in Australia for decades.
The system operates through BECS, which has been processing batch payments since the late 1960s and 1970s. When you set up a direct debit, your funds typically take 1–3 business days to settle, and confirmation of successful or failed payments can extend to 7+ days when weekends and holidays are involved.
Customers authorise direct debit in several ways:
- Signing paper direct debit request forms
- Completing online forms during checkout or account setup
- Providing BSB and account number details to a merchant or biller
The merchant or their payment processor stores this authority and uses it to initiate future debits. After setup, making changes—whether that’s cancellation, updating account details, or adjusting payment amounts—usually requires contacting the business or your bank. There’s no central dashboard where customers can see all their active direct debit arrangements.
Direct debit instructions are processed in daily batches on business days only. No weekend or holiday settlements, and notification of failures or dishonours arrives only after the process completes. This creates uncertainty for both businesses waiting for funds and customers managing their account balance.
Despite these limitations, direct debit became popular for good reasons: relatively low cost compared with card payments, predictable batch processing that businesses could plan around, and suitability for fixed schedules like monthly or fortnightly bills.
What Is PayTo?
PayTo is a digital, real-time payment service built on Australia’s New Payments Platform (NPP). It’s designed to modernise—and eventually replace—many of the use cases currently handled by BECS Direct Debit.
The core difference lies in how payments are authorised and managed. PayTo uses payment agreements (also called mandates) that customers approve and control directly within their internet banking or mobile banking app. No paper forms, no handing over account details to be stored by merchants.
PayTo supports multiple payment types:
- Recurring payments: Weekly, fortnightly, or monthly subscriptions
- Ad hoc payments: Variable amounts within agreed parameters
- One off authorisations: Single payments with defined limits
Major Australian banks—CBA, ANZ, Westpac, NAB, and many regional institutions—now support PayTo for their customers. Businesses access PayTo through payment providers, gateways, or direct bank integrations.
PayTo isn’t simply a like-for-like replacement for direct debit. It’s designed to offer both businesses and consumers real time visibility of payment status, richer transaction data, and programmable payment logic that opens up new billing models.
As BECS Direct Debit phases out over the rest of the decade, PayTo will take over much of this functionality. The transition has already begun.
How PayTo Works in Practice
The customer journey with PayTo is straightforward but fundamentally different from direct debit.
When a business offers PayTo at checkout or during contract setup, the customer provides either their BSB and account number or a PayID (linked to their mobile number, email, or ABN). The business then sends a PayTo agreement request.
This request appears in the customer’s banking app for review. The agreement clearly displays:
- The merchant’s name
- Payment frequency (one-off, weekly, monthly, etc.)
- First payment date
- Maximum payment amount or amount rules
- How to pause or cancel
Once the customer approves through their secure banking app—typically with multi-factor authentication—the agreement is active. The business can then initiate payments under that agreement, and funds transfer instantly via the NPP rails.
Customers can open their banking app at any time to see all active PayTo agreements in one place. From there, they can pause upcoming payments, change the linked account (where supported), or cancel the agreement entirely. No phone calls required.
Merchants receive near real time notifications when agreements are activated, modified, paused, or cancelled—and when payments succeed or fail. This responsiveness transforms how businesses handle billing operations.
PayTo also works with PayID aliases instead of BSB and account numbers, reducing data entry errors and simplifying the setup process for customers.
PayTo vs Direct Debit: Key Differences Side by Side
Understanding the practical differences between PayTo and direct debit helps businesses choose the right method and helps consumers know what to expect. Here’s how they compare across the dimensions that matter most.
Feature | PayTo | Direct Debit (BECS) |
Speed & Settlement | Real time, under 15 seconds | 1–3 business days, batch processed |
Operating Hours | 24/7/365 | Business days only |
Authorisation Method | In-app approval with MFA | Paper/online forms, merchant stores mandate |
Customer Control | Pause, modify, cancel in banking app | Contact merchant or bank for changes |
Visibility | All agreements visible in one app dashboard | Track via bank statements only |
Security | Bank-grade authentication, no account details stored by merchant | Merchant holds mandate and account details |
Failure Notification | Instant, with specific reason codes | 3–5 days delay, generic dishonour codes |
Infrastructure | New Payments Platform (NPP) | Bulk Electronic Clearing System (BECS) |
Speed and Payment Certainty
The timing difference between PayTo and direct debit creates real operational impacts for businesses and customers alike.
With direct debit, the 1–3 business day settlement window means businesses don’t know if a payment succeeded until well after initiation. Failed payments generate dishonour notifications days later, often with generic codes that don’t explain what went wrong. This uncertainty complicates cash flow planning and reconciliation.
PayTo payments are initiated and confirmed in real time. Businesses see immediate success or failure with specific reason codes, enabling instant retries or automated customer communication. Because PayTo validates account availability at payment time, there are fewer surprise dishonours appearing days later.
Concrete example: A subscription service billing via PayTo on a Sunday evening sees the payment settle immediately. The same transaction via traditional direct debit wouldn’t even begin processing until Monday or Tuesday, with confirmation potentially arriving Wednesday or later.
For SMEs and subscription businesses, faster settlement directly improves cash flow management. One analysis found that settlement delay costs alone translate to nearly $30,000 in annual savings for a business processing $500,000 monthly when transitioning to PayTo.
Customer Control and Experience
With direct debit, customers often only discover debits after they’ve occurred. Making changes—updating account details, adjusting amounts, or cancelling—requires calling or emailing the business, then waiting for changes to process through batch systems.
PayTo centralises control within the banking app. Customers can:
- Review agreement details before approving
- See all active agreements in one list
- Change the linked payment account (where supported)
- Pause upcoming debits temporarily
- Cancel agreements with a few taps
This live visibility helps customers spot unwanted or forgotten services and manage their budgets proactively.
Practical scenario: A customer going on holiday can pause a PayTo agreement for meal kit deliveries directly in their app. After a trial period ends, they can cancel a subscription immediately without waiting on hold or sending emails to request cancellation.
This level of control actually benefits businesses too—customers who feel informed and empowered generate fewer disputes and chargebacks.
Security and Fraud Risk
Traditional direct debit requires businesses to securely store mandate and bank account details. This creates risk exposure if merchant systems are compromised.
PayTo leverages the secure environment of the banking app. Agreements are approved within trusted banking applications, typically requiring multi-factor authentication and device verification. Merchants never need to store full bank account credentials in the same way—the PayTo infrastructure manages agreement and debit authorisation.
Strong in-app authorisation significantly reduces unauthorised debits and makes dispute resolution clearer. Both the bank and customer can see exactly what was authorised and when. Data shows fraud rates for PayTo run 73% lower than direct debit.
That said, customers should still watch for phishing attempts and always verify PayTo agreement details before confirming in their app.
Benefits of PayTo for Consumers
PayTo gives everyday Australians more control, transparency, and flexibility over recurring and ad hoc payments from their bank account.
Key consumer benefits:
- Real-time visibility: See exactly who can debit your account and when
- Simple management: Pause or cancel agreements instantly through your app
- Flexible account selection: Choose or change which account gets debited
- Faster resolution: Know immediately if a payment fails, not days later
- Better budgeting: Real-time debits mean your balance updates instantly
The payment agreements list in your banking app functions like a central dashboard for all ongoing payment commitments. This helps avoid those “set and forget” subscriptions that continue billing long after you’ve stopped using a service.
In-app notifications alert you when new agreements are created or when existing ones change. Fewer surprises, better awareness.
PayTo works well for streaming subscriptions, BNPL-style instalments, fitness memberships, or any recurring payment where you want tight control over renewals. And because debits happen in real time, your available balance always reflects your actual cash on hand.
Managing PayTo Agreements in Your Banking App
Most Australian banking apps now include a “Payment agreements” or “PayTo” section. Here you’ll find:
- Active agreements with merchant name, frequency, and next payment date
- Paused agreements
- Cancelled agreements (for reference)
To manage an agreement, you typically:
- Navigate to the PayTo or Payment Agreements section
- Select the specific agreement you want to modify
- View full details including payment amount, schedule, and merchant information
- Choose to change the linked account, pause payments, or cancel the agreement
Important: Pausing or cancelling a payment agreement stops the payments, but doesn’t automatically cancel any underlying contractual obligations. If you cancel a PayTo agreement for your gym membership, you should also confirm cancellation with the gym to avoid any responsibility for unpaid bills.
Some banks set per-agreement or per-transaction limits for consumer PayTo. If you can’t find PayTo options in your app yet, check with your bank about rollout timelines and which accounts are eligible.
Benefits of PayTo for Businesses and Merchants
For businesses, PayTo addresses several pain points that direct debit has never fully resolved: cash flow delays, failed payments, administrative overhead, and customer service friction.
Core business benefits:
- Real time settlement: Receive cleared funds almost instantly versus waiting 1–3 days
- Reduced dishonours: Upfront account validation and instant failure notification cut failed payment rates significantly
- Lower support volume: Customers self-manage agreements, reducing calls about updates and cancellations
- Flexible billing: Support usage-based fees, variable invoices, and microtransactions more easily
- Competitive costs: Generally comparable to or lower than card payment processing fees
The improvement in failed payment recovery is substantial. When customers receive immediate notification with specific guidance about why a payment failed, recovery rates improve 40–60% compared to the delayed, generic dishonour process of direct debit.
For subscription and recurring billing businesses, the cash flow impact alone justifies attention. One detailed comparison showed PayTo’s total cost of ownership at $28,704 annually versus $507,588 for direct debit across identical transaction volumes—representing 94% cost reduction when factoring in fees, failure handling, and operational overhead.
Operational and Technical Considerations
To offer PayTo, businesses typically integrate via their bank, a payment gateway, or a specialist payments provider that supports NPP PayTo.
Implementation involves:
- Mapping PayTo agreements to customer accounts
- Updating billing systems to handle real-time responses
- Designing flows for agreement initiation, modifications, and failure handling
- Training staff on new terminology and processes
PayTo can coexist with direct debit during transition. Many businesses support both methods, offering PayTo to new sign-ups while maintaining existing direct debit arrangements. Migration can be gradual.
PayTo’s richer data and event notifications enable automation. Agreement created, paused, cancelled, payment succeeded, payment failed—each event can trigger CRM updates, dunning workflows, or customer communications. This transforms reactive payment operations into proactive customer management.
Factor in internal change management and customer education. PayTo introduces new concepts like “agreements” and app-based approvals that customers previously needed to learn.
Costs, Limitations, and Adoption Challenges
While PayTo offers clear advantages, it’s still rolling out across the Australian payments ecosystem. Not everything is in place yet.
Pricing considerations:
- PayTo is typically priced per transaction (fixed fee) rather than percentage-based like cards
- Generally cheaper than card payments and comparable to direct debit fees
- Exact pricing varies by bank and payment provider
Current limitations:
- Not all banks fully support PayTo yet, particularly some smaller institutions and older business accounts
- Some merchants hesitate due to upfront integration costs, especially if heavily invested in existing direct debit infrastructure
- Consumer awareness is still developing—many recognise “direct debit” but may not understand what PayTo is
- Some high-value or high-risk payments may face additional rules or limits
The coverage gap matters. If a significant portion of your customer base banks with institutions not yet supporting PayTo, you’ll need to maintain direct debit as an alternative.
When Direct Debit Still Makes Sense (For Now)
Direct debit remains viable for certain situations:
- Stable, predictable payments: Where immediate settlement and granular control aren’t critical
- Legacy systems: Established loan books or billing platforms with deep direct debit integration
- Older customer demographics: Some customers prefer not to interact with digital banking apps frequently
- Limited bank support: If your bank or processor doesn’t yet support PayTo
A pragmatic approach works best. Keep direct debit running while planning PayTo integration and migration ahead of BECS retirement timelines.
That said, new projects, product launches, or services should consider PayTo first. The regulatory and infrastructure direction is clear.
Is PayTo Replacing Direct Debit? What to Expect by 2030
BECS Direct Debit is targeted for progressive wind-down in Australia, with formal retirement currently expected around 2030.
In practical terms, this means:
- New innovation and investment focus on PayTo and NPP
- Direct debit will mainly serve legacy contracts and systems
- Existing direct debit arrangements won’t automatically convert—merchants must actively migrate
- Regulators and the RBA support modern, real-time infrastructure for competition, transparency, and security
For businesses: Develop a staged roadmap. Start offering PayTo to new customers now, then design campaigns to migrate existing direct debit customers where feasible. Don’t wait until 2029.
For consumers: Familiarise yourself with the PayTo section of your banking app. More services—utilities, subscriptions, finance products—will adopt PayTo between now and 2030.
Choosing Between PayTo and Direct Debit Today
If you value speed, control, and transparency, PayTo should generally be your preference where available.
For businesses:
- Use PayTo for new sign-ups, subscriptions, and digital-first services
- Keep direct debit as a backup for customer segments not yet eligible or comfortable with PayTo
- Plan integration now rather than scrambling as BECS retirement approaches
For consumers:
- Opt in to PayTo when your bank and merchants offer it
- Gain in-app visibility, easier cancellation, and real-time balance updates
- Check your banking app to see if PayTo agreements are already available
PayTo isn’t just another payment type. It’s a fundamental shift in how Australians authorise and manage ongoing payments from their bank accounts. Direct debit served its purpose for decades, but the future belongs to real-time, transparent, customer-controlled payment agreements.
Understanding these differences now positions you—whether you’re running a business or managing household bills—for smoother transitions as PayTo adoption grows across Australia.
Accept PayTo Payments Today with Cashwo
If you’re an Australian business ready to move beyond direct debit, Cashwo makes it easy to start accepting PayTo payments — without the complexity or cost of enterprise-grade integrations.
Cashwo is an Australian-built, ASIC-regulated payment platform (AFSL No. 518990) powered by PayTo and the New Payments Platform (NPP). It’s designed specifically for small and medium businesses that collect recurring or scheduled payments — think gyms, salons, property managers, subscription services, consultants, and anyone who bills clients on a regular schedule.
Why businesses choose Cashwo:
- Real-time PayTo payments — funds settle instantly via NPP, so you always know exactly where your cash flow stands
- Set and forget recurring billing — create a payment agreement once, and Cashwo handles every charge automatically from there
- Bank-grade security — customers approve payments directly through their banking app with multi-factor authentication; no sensitive data stored by the merchant
- Automated follow-ups — no more chasing late payments; Cashwo sends polite reminders automatically so you don’t have to
- Transparent, flat-rate pricing — $50 per month covers up to 30 transactions, with just $0.99 per additional transaction; no percentage fees, no hidden charges
- First 3 months completely free — full access to all features with zero cost while you get started, no credit card required
- Local Australian support — speak to a real person based in Australia, not an offshore chatbot
Who is Cashwo built for?
Cashwo is purpose-built for Australian SMBs across a range of industries:
- Gyms and fitness studios — automate weekly and monthly membership billing without managing bank details or chasing failed debits
- Real estate agents and property managers — collect rent, deposits, strata fees, and commissions with zero late-payment chasing
- Beauty salons and wellness clinics — accept deposits, prepaid packages, and recurring appointments with instant payment confirmation
- Subscription and service businesses — meal kits, tutoring, pest control, IT support, consulting retainers — any business with predictable recurring revenue
How Cashwo works in 3 steps:
- Create your payment request — set the amount, frequency, and start date, then send the request to your customer via SMS, email, or a link
- Customer approves in their banking app — they see the full agreement details and approve securely using their existing bank’s multi-factor authentication. No account details shared with you.
- Get paid automatically — payments process on schedule, funds settle instantly, and you receive a real-time alert in your Cashwo merchant dashboard the moment each payment lands
As PayTo becomes the default for Australian recurring payments ahead of the BECS wind-down, there’s no better time to get your business set up on the right infrastructure. Cashwo gives you everything you need — the technology, the compliance, and the support — in one simple platform built for Australian businesses.
Start your free 3-month trial at cashwo.com.au — no credit card required.