An improved system for managing direct debits is going live. CBA and Bendigo Bank will be among the first to offer it to customers in the coming months.
Direct debiting is on the cusp of major change as new payment functionality known as PayTo goes live on Thursday. Once it is turned on by banks, it will give customers more control over recurring payments and it will reduce costs for billers.
The improved feature for the new payments platform is a key priority for the Reserve Bank, which was frustrated with three of the major banks missing the June 30 deadline for providing PayTo to their customers.Commonwealth Bank is ready to enable the system soon, but Westpac, ANZ and National Australia Bank are not and may not be able to offer the customer enhancements until the first quarter of next year, after the RBA imposed a deadline of April 2023.
PayTo creates a digital alternative to recurring debit payments, and will ultimately allow broader payments to be made with bank accounts rather than using cards. Customers will get more control over direct debits, by authorising them inside banking apps. Billers like energy utilities and other companies who accept payments will be able to reduce costs by cutting the administrative burden when payments are missed, and by shifting payments off more expensive credit card networks by linking to customers’ bank accounts directly.
The first financial institutions to enable payer customer accounts in the coming months are Commonwealth Bank of Australia, BankWest, Bendigo and Adelaide Bank, RACQ Bank, Great Southern Bank and the People’s Choice Credit Union.
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