What is PayTo & open banking? How businesses can get paid faster

Published 11 March 2026

Table of contents

• What is PayTo in Australia?
• How open banking, A2A payments, and PayTo work together in Australia
• How does PayTo work?
• Benefits of PayTo for small businesses
• PayTo vs PayID, direct debit, and cards
• Make PayTo work with Xero
• FAQs on PayTo and open banking in Australia

Key takeaways

• PayTo receives your customer payments instantly, improving your cash flow.
• The PayTo system’s real-time settlements and automated approvals make it easier to manage recurring payments, freeing up your time for other business tasks.
• PayTo also cuts out debit and credit card fees, so transaction costs are lower than these older payment methods.

What is PayTo in Australia?

PayTo in Australia is a secure, real-time digital payment method that lets businesses receive money directly from customers. Customers can authorise their payments using their PayID or BSB account number, either online or in their mobile banking app.

PayTo is a modern alternative to direct debits, approving transactions 24/7 – including on weekends and public holidays – making transactions faster. It works with one-off and recurring payments across most modern payment methods, including in-person, online, or in-app transactions. It can even process large, recurring business expenses like payroll and accounts payable.

Overall, PayTo can significantly streamline a small business’s operations and make day-to-day planning easier.

How open banking, A2A payments, and PayTo work together in Australia

Australia’s open banking system is part of the Consumer Data Right (CDR), which aims to make data sharing more transparent across a range of industries, including banking. Open banking primarily enables secure sharing of financial data, while also providing the infrastructure for new account-to-account (A2A) payment solutions.

PayTo is Australia’s regulated A2A payment solution built on open banking. It lets small businesses collect one-off or recurring payments directly from customers’ bank accounts, with faster settlement, lower fees, and clearer transaction data for easier reconciliation in your preferred accounting software.

In short, PayTo turns open banking and A2A payments into a practical, cost-saving solution for small businesses in Australia.

Here’s more information from the Australian government about the CDR service.

How does PayTo work?

To use PayTo you need to secure sponsorship from your bank or payment service provider (PSP) like Stripe or PayPal. You can then create and manage any PayTo agreement with customers and process instant account-to-account payments. Agreements let businesses send payment requests and include terms like payment amounts or frequency. Customers can manage these details in their banking app.

Here’s how PayTo works in practice:

1. You send a PayTo agreement (directly or via a third party like Xero or Stripe) to the customer’s online banking service or app.
2. The customer reviews and authorises the payment.
3. You receive funds nearly instantly.
4. You get a notification about whether the payment has succeeded or failed, or if the customer has paused or cancelled the subscription.

Benefits of PayTo for small businesses

PayTo gives small businesses a faster, safer, and more efficient way to pay and get paid. Here are some of its main benefits for small businesses:

• Faster payment settlement: PayTo gives almost instant settlement payments. This helps improve your cash flow and forecasting easier, helping you manage your expenses.
• eInvoicing support: This makes invoice payments easier for you and your customers.
• Automated recurring payments: With PayTo, recurring payments are automatic, reducing the time spent chasing overdue invoices.
• Real-time notifications: PayTo sends you a notification whenever a customer authorises, pauses, changes, or cancels a PayTo agreement. This transparency helps you identify any problems and correct them quickly, potentially helping your customer relationships.
• Easier reconciliation: Each PayTo payment includes transaction data that links directly to your customer records and invoices, helping streamline your business payment reconciliation.
• Stronger security and lower costs: PayTo is one of Australia’s most secure online payments. The New Payments Platform (NPP) encrypts all PayTo data to protect sensitive information. Additionally, customer authorisations use the same authentication as banks, so only the account owner can approve payments.

PayTo vs PayID, direct debit, and cards

Here’s a quick comparison between PayTo and other popular payment methods:

PayTo vs PayID

PayTo and PayID are digital payment methods that let businesses transfer money directly between accounts quickly and securely, either online or with a mobile banking app.

PayTo suits many small businesses, while PayID is more suitable for peer-to-peer payments. Here’s why:

• PayTo sends your customers automated payment requests, making it work well for recurring subscriptions, retainers, and invoices. According to a 2022 RBA Consumer Payments Survey, 83% of people already use automatic payment arrangements, so PayTo offers a simple and flexible way for customers and businesses to manage these payments.
• Conversely, PayID lets customers make payments using an email address, phone number, or ABN instead of sharing bank details. It provides options that are easier to remember than bank account numbers.

PayTo vs direct debit

PayTo and direct debit are both account-to-account payment options. However, PayTo works in real time, giving businesses faster payment settlement compared to direct debit.

Direct debit (where customers pay by bank transfer) can also take days to process because it only authorises payments during business hours. It also requires customers to share bank details, which may make customers uneasy.

PayTo vs card payments

PayTo is better for invoicing and online payments, while credit cards are more suitable for point-of-sale purchases and international payments outside Australia.

PayTo is faster than using a credit card, and PayTo merchants’ transaction fees are usually lower than credit card companies’ charges.

Make PayTo work with Xero

Xero makes it much easier to manage PayTo transactions. When PayTo is enabled through Stripe, payments flow directly into Xero with clear transaction data, helping you reconcile payments faster, track cash flow in real time, and reduce manual admin.

PayTo is available to all Xero users with a Stripe account. Here are some simple steps to make PayTo work with Xero software:

• Go to the Business menu and select Online paymentsor select Payment services from the Settings menu.
• In Manage payment methods, find PayTo and click Turn on.

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FAQs on PayTo and open banking in Australia

Here are some answers to frequently asked questions about PayTo and open banking in Australia:

Is PayTo a safe way to manage customer payments?

Yes, PayTo is very safe. It integrates with the New Payment Platform (NPP) and is overseen by the Reserve Bank of Australia. Every PayTo agreement goes through authorisation within your customer’s online banking platform, which means you never handle or store their sensitive information. This adds an extra layer of protection for both your business and the customer.

Who operates PayTo in Australia?

Australian Payments Plus (AP+) operates PayTo in Australia. AP+ is an amalgamation of BPAY, EFTPOS, ConnectID, Beem, and NPP Australia. Together, they form a central body to oversee bank-backed payments. AP+ oversees the real-time payment infrastructure behind PayTo and ensures it runs smoothly across banks and PSPs.

AP+ also sets and enforces banking standards and compliance requirements that protect businesses and consumers. The RBA provides regulatory oversight to maintain the integrity, stability, and reliability of the system.

How do I cancel a PayTo agreement?

The exact steps depend on your financial institution or PSP. However, if you access the portal and select the agreement you want to cancel, there should be an option to do so. The customer receives a notification, but you can also inform the customer yourself.

How does PayTo differ from PayID?

Both PayTo and PayID are digital payment methods. Businesses and customers can send, receive, and track payments all in one place with online or mobile banking. They both offer instant payment confirmation and operate 24/7.

PayTo has some advantages:

• It gives businesses more control over the amount they request, while PayID relies on the customer to input the correct amount.
• PayTo is also a better way to collect money or encourage payments directly from customers because it automates reminders and reduces missed or late payments. It’s especially useful for recurring payment automation as it doesn’t rely on the customer to remember to make the transfer – they receive a reminder before every due date.

Do I need PayID to use PayTo?

No, you don’t. Although PayID is an efficient way to join the platform, it’s possible to enter BSB account details manually instead.

To start using PayTo, your business needs sponsorship from a financial institution or service provider. Once the financial institution approves your business as a PayTo user, it can then accept payments from anyone with an Australian bank account.

Which banks support PayTo?

Over 50 financial institutions in Australia support PayTo, including banks like CBA, ANZ, NAB, and Westpac. Payment service providers like Stripe, Azupay, and GoCardless can sponsor businesses as PayTo Users.

How fast are PayTo payments?

PayTo payments are virtually instant. Generally speaking, the money appears in the account directly after the customer approves the PayTo agreement – usually within a few minutes. The system operates 24/7 rather than within set business hours, so there’s no waiting over the weekend or on public holidays.

A payment might take a bit longer if it goes through an additional security check, but these delays are rare.

How much does PayTo cost businesses?

The cost of PayTo depends on your payment service provider or bank. Fees can vary, so check each provider’s pricing structure to find the best fit for your business.

Most providers charge a percentage fee per transaction, sometimes combined with a small flat fee. Some also set a maximum cap per transaction to limit costs for larger payments.