With most businesses adopting PayTo within their payment systems, it’s important to know how to set it up for you and your company’s success. So, we’re here at PayChoice with a brief guide on what Australian businesses can do to prepare and implement PayTo within their payment stack.
What is PayTo?
The New Payments Platform (NPP) has introduced this innovative digital payment system within the financial service industry. Through this system, businesses can initiate recurring or ad-hoc real-time payments from customers’ bank accounts.
How does PayTo Work?
As mentioned earlier, PayTo is built on NPP’s real-time payment infrastructure. Customers need to authorise the details, such as the amount and date for recurring payments before setting up the agreement.
This agreement appears in the customer’s online banking system or financial institution account. It can also appear in the mobile banking app for the customer to digitally approve and activate the agreement. According to contracted conditions, businesses can automatically debit a customer’s account.
If your business is implementing this payment system, it can impact the following sectors:
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Tech stack.
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UX and UI.
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Liquidity and treasury management.
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Product possibilities.
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Obligations facing your client.
How to Prepare Australian Businesses for PayTo
Here are some suggestions from experts about how firms should prepare for this system:
Have a Cash Management Plan
Direct debit system settles payments in overnight batches within 1-3 days of payment. PayTo, on the other hand, credits your account instantly.
So, your finance department will need to handle all intraday balance movements and instant liquidity. This also means that your treasury department might have to update their real-time payment environment.
Know Which Data Fields Might Be Impacted
As noted earlier, PayTo adds more variables and features to your payment stacks. So, as a business, you can check your fund balances even before the payment has been deducted from the customer's bank account.
To do that, NPP has adjusted and added new fields for exchanging information. This is done on both client-facing and payment provider sides.
Present Your Customer the Adjusted New Fields
Before signing the contract, customers must agree and complete the following fields:
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Payee account (i.e. your business).
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Description of the payment and its purpose.
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The amount.
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Frequency.
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Linked account of the payor’s choosing.
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Start date.
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End date (unless the payment is ad hoc).
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First payment.
Fill Mandatory Fields as the Payee or Creditor
As the payment recipient, the business must also present the following information within the PayTo order as per the central mandates depository of Australia.
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The initiating party
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BSB and Virtual Account Number.
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Payment agreement type (authorised payment mandate or migrated by creditor mandate)
This is done so that the PayTo mandate requests matches with the payer data from Australian banks on the other end. It will also allow for better data richness and ease of operations when troubleshooting.
Redesign Your Payment Workflow
Before you incorporate PayTo within your payment stack, you need to prepare each level of UX and UI for it.
You can start by rebuilding your payment backend and user interface from scratch. While it might mostly mean that you have to go back to end-customer testing, you might already have some periodic visits scheduled so it won’t be too much of a problem. Besides, if you have a single integrated API, the transition might be even more seamless.
Establish Communication and Agreement Processes
With PayTo, payers have greater control over the payments. For example, they
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Have 6 calendar days to approve of the agreements
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Need to reauthorise if they haven’t approved of the agreement within the time frame
So, you’ll need to communicate these conditions with your end customers.
Understand Your Obligations
All the obligations set by NPP must be strictly followed by customers; this includes approving the agreement within 6 calender days, and having to reauthorise if the time exceeds. However, it is to be noted that the agreements are for payment execution not for the underlying service. So, even if the PayTo mandate is cancelled, customers are still liable for fulfilling their part of the contracted obligations.
And to ensure the business is not liable to any claims, including failed payments and associated costs, the payment system must be valid. It must be initiated according to the new system’s rules and follow all NPP guidelines.
Setup Your PayTo Payment
PayTo will offer you more flexibility with payments - be it ad-hoc or recurring. But to do so, you need to set up a secure payment flow that aligns with your business model. Remember, the more complex your payments, the complicated and sophisticated your compliance procedures will be.
If you are interested in integrating this new payment system within your stack, contact us today for any inquiries!
