New Payments Platform (NPP) Australia is launching PayTo, a digital solution that allows merchants and businesses to initiate real-time payments from their customers’ bank accounts.

NPP Australia — an infrastructure company that enables customers of different banks to make and receive real-time payments — says it has been working with the financial services industry to develop the PayTo service.

The firm says PayTo is a “foundational capability” that will enable a broad range of use cases and provide a “springboard for future innovation”.

PayTo has been built to replace traditional direct debits, enhance recurring or subscription payments, improve payroll and accounts payable functions, have in-app and e-commerce utility, support faster employee payment times and enhance QR code payment options.

Following authorisation via a digital payment arrangement, referred to as a ‘PayTo agreement’, payments can be initiated from a customer’s account by a specified third party.

NPP Australia says this is typically authorised within the customer’s internet or mobile banking service, benefiting from the bank’s secure authentication practices already in place.

PayTo agreements are created, stored and maintained in a central database, the Mandate Management Service, or ‘MMS’. The MMS is owned and operated by NPP Australia.

Businesses can benefit from real-time account validation, real-time funds verification without manual verification, straightforward reconciliation, API connectivity and up-to-date notifications at each stage of a payment.

Customers stand to gain more control over the payments that leave their bank accounts and can view and manage the payments they have set up from within their internet or mobile banking app. They can also initiate payments directly from their bank account for payments that previously needed a card.