Australia real-time payments: Are instant bank transfers going to become the new direct debit?

Evolving in the age of ‘Instant’ gratification

In a new era where every tap and click counts, the demand for seamless, efficient, and adaptable payment solutions has never been greater. Social media platforms, e-commerce giants, and innovative fintech players are setting the bar high, redefining what consumers can expect from their payment experiences.

In the midst of it all, one common thread emerges: the desire for more control over payment choices and an expectation that payments should be not only fast but also cost-effective, dependable, and effortlessly convenient.

On the back of this, instant bank transfers are emerging as a compelling alternative to traditional card payments, particularly gaining ground in Australia. Instant bank transfers allow the secure movement of money from one bank account directly to another, with the payer's consent, bypassing card networks and the need for consumers to enter lengthy card details.

While cards remain the preferred payment method for most Australians, direct debit has stood out as the top preference when referring to recurring payments. Nevertheless, direct debit payments come with several drawbacks: 

• Delayed settlement: direct debit payments can take up to 4 days for money to move, causing delays in reconciling accounts and impacting merchants’ cash flow.

• Long setup process: setting up traditional direct debit can also be a slow and cumbersome process, requiring the manual entry of payment details potentially leading to fat-fingering errors.

• Limited flexibility: any changes to the agreement, such as updates to payment amounts or schedules, require manual intervention by the business, leading to increased complexity and additional back-and-forth communication with customers.

• Risk of payment failure: traditional direct debit agreements do not allow businesses to validate the payment before the agreement commences, increasing the risk of unsuccessful transactions.

Pay by Bank: The fast, simple and secure way to pay 

Influenced by the convergence of technological advancements and regulatory changes, innovative players are entering the payment space, reimagining the way consumers and businesses take and make payments; making it faster, easier and more secure.

Banked, already live in the UK, Europe and the US, is at the forefront of this evolving landscape and is now offering its flagship product, Pay by Bank, also in Australia. 

Pay by Bank operates seamlessly in Australia using the PayTo service developed by Australian Payments Plus and industry stakeholders, which allows merchants to set up a payment agreement with the consumers to pay directly from their bank account, offering a simple, high-converting, and secure option for consumers.

With Pay by Bank, businesses can enjoy the benefits of: 

• Instant settlement: payments are deposited directly into the merchants’ account, significantly optimizing cash flow.

• Seamless global API Integration: integrate once, access all. 

• Real-time customer validation: validate customer accounts in real-time, ensuring accurate and secure transactions while reducing fraud with e-banking or banking app authorisation.

• Instant Funds Verification: confirm payments instantly, providing peace of mind for both businesses and customers.

• Business efficiency and cost-effectiveness with automated reconciliation.

For consumers, Pay by Bank offers: 

• Increased control and flexibility: end users can view, pause, change, and cancel all their active and past PayTo agreements directly from their bank environment, with no need to go through the tedious process of reaching out to every single biller or merchant.

• Additional convenience: no need to create an account, remember unnecessary passwords or update expired or lost cards, simply from their bank account.

• Enhanced privacy: consumers can use PayID to identify themselves, ensuring personal information and account details remain completely private.

• Improved security: payers can approve and manage PayTo agreements securely from within their bank environment, benefiting from bank-grade authentication. 

So, can Pay by Bank transform into a serious contender for direct debit payments?

Building a springboard for payment innovation

Banked is building a global payments network built upon modern banking rails, powering real-time payments for consumers, businesses, and banks, improving customer experience, payment security, business efficiency, and cost-effectiveness. 

If you are an Australian business interested in adopting a fast, secure, and scalable instant payment system, let's connect and discuss.