Photo by Frolopiaton Palm
Australian MTOs can now settle customer collections in seconds using the New Payments Platform (NPP) and PayTo, replacing slow direct debits and card payments that take days to clear and attract chargebacks. The next frontier is cross-border interoperability — where NPP connects to India's Unified Payments Interface (UPI) and other real-time systems to deliver instant payouts into recipient accounts and wallets overseas.
This matters because the single biggest friction point in the remittance funnel is the funding leg. If your customer's money takes two business days to land in your settlement account, your corridor speed promise is fiction regardless of how fast your payout partner moves. Real-time rails compress that funding delay to seconds, reduce fraud exposure, and give you cleaner reconciliation. This guide explains how to use NPP and PayTo for collections today, and how emerging UPI interoperability will reshape payouts to India, Sri Lanka, Nepal, and beyond.
Key Takeaways
- NPP processes payments in under a minute, 24/7, settling across more than 100 participating institutions and covering the vast majority of Australian bank accounts.
- PayTo replaces the BECS direct debit system with real-time, pre-authorised payment agreements — reducing dishonours, chargebacks, and funding delays for MTO collections.
- India's UPI handles over 16 billion transactions per month, and cross-border linkages with systems like Singapore's PayNow show the model that NPP–UPI interoperability will follow.
- Faster collections change your AML/CTF risk profile — real-time settlement removes the dishonour buffer, so your transaction monitoring and fraud controls must keep pace.
- The RBA's decision to end card surcharging from 1 October 2026 makes account-to-account rails like PayTo even more attractive for MTO funding economics.
What Is the New Payments Platform (NPP)?
The New Payments Platform is Australia's real-time payments infrastructure, launched in 2018 and operated by NPP Australia (now part of Australian Payments Plus). It settles payments between accounts in near real-time, around the clock, every day of the year — a sharp contrast to the legacy Bulk Electronic Clearing System (BECS), which batches payments and settles on business days only.
For a remittance operator, the relevance is simple: money moves in seconds, not days. When a customer funds a transfer, you can confirm receipt almost instantly and release the payout leg without waiting for overnight batch clearing. This closes the window where a customer could reverse a payment after you've already paid out overseas.
NPP uses the PayID addressing service, letting customers send money using a phone number, email, or ABN instead of a BSB and account number. It also carries richer payment data than legacy rails, supporting longer remittance descriptions and structured data aligned with the global ISO 20022 messaging standard.
NPP overlay services: Osko and PayTo
NPP is the underlying infrastructure. The services customers interact with sit on top as overlay services:
- Osko — the consumer-facing fast payment service most Australians use when they make an "instant" bank transfer.
- PayTo — the newer overlay that replaces direct debits with real-time, authorised payment agreements.
For MTO collections, PayTo is the service that matters most, because it lets you pull funds from a customer's account with their pre-authorisation, in real time, with confirmation of funds availability.
How PayTo Transforms MTO Collections
PayTo is a digital, real-time alternative to the BECS direct debit system. Instead of lodging a direct debit request that may dishonour days later, you establish a payment agreement (also called a mandate) with your customer, authorised directly in their banking app. Once authorised, you can initiate payments against that agreement and receive near-instant confirmation.
This solves three persistent problems for remittance collections.
Dishonours and insufficient funds. With traditional direct debit, you don't know a payment has failed until the bank returns it — often one to three days later, after you may have already released the payout. PayTo checks funds availability at the point of payment, so you know immediately whether the collection succeeded.
Chargebacks. Card payments carry chargeback risk, where a customer disputes a transaction weeks later and you lose both the funds and a dispute fee. Account-to-account PayTo payments are authorised and pulled directly, removing the card scheme chargeback mechanism entirely.
Funding speed. Card settlements and BECS debits both introduce delay before cleared funds reach your account. PayTo settles in real time across NPP, so your working capital is freed immediately and your corridor payout can proceed.
PayTo payment agreement types for remittance
| Agreement type | Use case for MTOs |
|---|---|
| One-off fixed | A single transfer where the customer authorises a specific amount |
| Recurring fixed | Regular remittances of the same amount (e.g. monthly family support) |
| Recurring variable | Regular transfers where the amount changes each time |
| Usage-based | Pay-as-you-go funding tied to transaction activity |
For most MTOs, one-off fixed agreements map cleanly to individual transfers, while recurring agreements suit customers who send regular remittances to the same corridor. The agreement is stored in the customer's bank, giving them visibility and control — which also supports your consumer protection obligations.
The End of Card Surcharging Strengthens the Case for PayTo
The RBA will remove the ability to surcharge card payments from 1 October 2026. For MTOs that currently pass card acquiring costs to customers through a surcharge, this means absorbing those fees directly — squeezing margins on card-funded transfers.
Account-to-account rails like PayTo cost significantly less than card acquiring, with no interchange, no scheme fees, and no chargeback exposure. As surcharging ends, the economics shift decisively toward NPP-based collection. MTOs that move customers onto PayTo now will protect margin that card-reliant competitors lose.
This is a strategic timing point. Building a PayTo collection flow takes integration effort, so starting before the October 2026 surcharging change gives you a cost advantage precisely when card economics worsen for everyone else.
Cross-Border Interoperability: NPP Meets UPI
The real prize for remittance operators is cross-border real-time interoperability — linking Australia's NPP to fast payment systems in recipient countries so payouts land instantly in beneficiary accounts and wallets.
India's Unified Payments Interface (UPI) is the model that demonstrates what this looks like at scale. According to the National Payments Corporation of India (NPCI), UPI processes more than 16 billion transactions per month, making it the world's largest real-time payment system by volume. UPI links bank accounts to simple virtual payment addresses (VPAs), enabling instant transfers through a single interface.
UPI is already connecting across borders. Singapore's PayNow linked to UPI in 2023, allowing real-time remittances between the two countries using only a mobile number or VPA. The Bank for International Settlements (BIS) Project Nexus aims to standardise connections between multiple domestic fast payment systems — including India's UPI and systems across Southeast Asia — into a single interoperable network.
What NPP–UPI connectivity would mean for Australian MTOs
The Australia–India corridor is one of the fastest-growing remittance flows, driven by a large student and skilled-migrant population. Direct NPP–UPI interoperability would let an Australian MTO collect funds via PayTo in seconds and pay out directly into an Indian recipient's bank account or UPI VPA in seconds — an end-to-end instant corridor.
The practical benefits:
- Instant payout into recipient accounts, removing the overnight or multi-day lag of legacy correspondent banking.
- Lower cost by bypassing intermediary correspondent banks and their fees.
- Richer data carried through ISO 20022 messaging, improving reconciliation and compliance screening.
- 24/7 availability, matching how customers actually send money — evenings and weekends, not business hours.
While a direct Australia–India fast payment link is not yet live for general MTO use, the building blocks are converging. MTOs serving the India corridor should architect their payout layer to accommodate real-time rails as they come online, rather than hard-coding to correspondent banking alone.
Comparing Payment Rails for Remittance Collections and Payouts
| Rail | Speed | Availability | Cost profile | Chargeback risk | Best use |
|---|---|---|---|---|---|
| PayTo (NPP) | Seconds | 24/7 | Low | None | Domestic AU collections |
| Osko (NPP) | Under 1 min | 24/7 | Low | None | Customer bank transfers in |
| BECS direct debit | 1–3 days | Business days | Low | Dishonour risk | Legacy, being phased out |
| Card (Visa/MC) | Instant auth, delayed settle | 24/7 | High | High | Convenience funding |
| UPI (India) | Seconds | 24/7 | Very low | Minimal | India payout (emerging) |
| SWIFT correspondent | 1–3 days | Business days | High | None | Legacy cross-border payout |
The direction of travel is clear: real-time account-to-account rails dominate on speed, cost, and risk for both collections and payouts. SWIFT remains essential for corridors without a real-time link, but its share of high-volume consumer remittance corridors will shrink as interoperability expands.
Compliance Implications of Real-Time Rails
Faster money movement changes your AML/CTF risk surface, and AUSTRAC expects your controls to keep pace. When collections and payouts both settle in seconds, you lose the buffer that batch processing used to provide — the window in which a suspicious transaction could be flagged and held before funds left your control.
This has three concrete consequences for your AML/CTF program.
Transaction monitoring must run in real time or near-real-time. Overnight batch screening is incompatible with instant payout. You need rules and risk scoring that execute before the payout leg releases, holding transactions that trip thresholds for review.
Fraud controls move upstream. With no dishonour window and no chargeback mechanism on PayTo, a fraudulent or mistaken payment is harder to claw back. Your onboarding, device checks, and behavioural analytics carry more weight because the rail gives you fewer second chances.
Reporting obligations are unchanged but faster to trigger. Your Threshold Transaction Report (TTR) and International Funds Transfer Instruction (IFTI) obligations apply regardless of rail speed. Real-time cross-border payouts via interoperable systems still generate IFTI reporting — and the Travel Rule data requirements from 1 July 2026 apply to these transfers, meaning you must collect and transmit originator and beneficiary information with each payment.
Designated services and the value transfer chain
Under the 2026 AML/CTF reforms, the concept of designated remittance arrangements is replaced by the value transfer chain. Whether you collect via PayTo or pay out via an interoperable UPI link, you remain a reporting entity providing a designated service, and your position in the value transfer chain determines your obligations. Adopting new rails does not reduce your regulatory footprint — it changes the operational mechanics beneath the same compliance framework.
How to Integrate NPP and PayTo Into Your Stack
Most MTOs access NPP and PayTo not by connecting directly to the platform, but through a sponsoring bank or a payment service provider (PSP) that is an NPP participant. Direct NPP membership requires significant capital and technical certification, so for most operators a provider relationship is the practical path.
A typical integration follows these steps:
- Select an NPP-connected PSP or sponsor bank that offers PayTo initiation and supports your transaction volumes and corridors.
- Complete the provider's onboarding and due diligence, including evidence of your AUSTRAC registration and AML/CTF program.
- Integrate the PayTo API to create payment agreements, initiate payments, and receive real-time status webhooks.
- Build real-time reconciliation that matches incoming NPP settlements to customer transfer records automatically.
- Wire real-time transaction monitoring into the payment flow so high-risk transactions are held before payout.
- Test end-to-end across success, failure, and partial scenarios before going live with customer funds.
An API-first architecture makes this far easier — if your platform already treats payment rails as pluggable services, adding PayTo (and later an interoperable payout rail) is an integration project rather than a rebuild. Operators with monolithic, rail-specific code face a harder path.
Key questions to ask your PSP or sponsor bank
- Which overlay services (PayTo, Osko) do they support, and at what message throughput?
- How do they handle PayTo agreement lifecycle events (creation, amendment, suspension, cancellation)?
- What is their settlement timing into your operating account, and is it genuinely real-time?
- Do they provide ISO 20022 structured data fields you can use for compliance screening?
- What is their roadmap for cross-border interoperability (Nexus, UPI, PayNow linkages)?
Practical Scenario: Rebuilding the India Corridor Funnel
Consider an MTO running the Australia–India corridor with a card-funded collection and correspondent-bank payout. Today, a customer pays by card (attracting a surcharge that disappears after October 2026), the MTO waits for settlement, then pushes funds through a correspondent chain that credits the Indian recipient in one to two business days.
Re-architected on real-time rails, the same transfer looks different:
- Customer authorises a PayTo agreement in their banking app during onboarding.
- At transfer time, the MTO initiates a PayTo payment; funds confirm and settle in seconds.
- Real-time monitoring screens the transaction; it clears risk scoring instantly.
- The payout leg routes through an interoperable UPI link (as these come online), crediting the recipient's account in seconds.
- The MTO files the IFTI with full Travel Rule data attached.
The customer experience shifts from "money arrives tomorrow" to "money arrives now" — the single most powerful differentiator in a corridor where competitors still rely on correspondent banking. The cost structure improves by removing card fees and correspondent intermediaries, directly supporting more competitive pricing on your rate board.
The Road Ahead: Project Nexus and Multilateral Interoperability
The BIS Project Nexus represents the most ambitious effort to connect domestic fast payment systems globally. Rather than building bilateral links one country pair at a time, Nexus provides a standardised connection layer, so each participating system connects once and gains reach to all others. Founding participants include real-time payment operators across several Asian economies, with India's UPI among the systems in scope.
For Australian MTOs, the significance is that interoperability will arrive as infrastructure, not as a series of one-off deals. As NPP and Nexus-connected systems link up, instant cross-border payout becomes available across multiple corridors at once — India, Southeast Asia, and the Pacific among the likely beneficiaries given Australia's remittance geography.
The operators best positioned to capture this are those who have already moved domestic collections onto PayTo, built real-time compliance controls, and architected their payout layer to accept new rails. Doing that groundwork now means you can switch on each interoperable corridor as it launches, rather than scrambling to re-engineer under competitive pressure.
Frequently Asked Questions
Can my MTO connect directly to the New Payments Platform?
Direct NPP membership requires substantial capital, technical certification, and ongoing obligations, so most MTOs connect through an NPP-participating sponsor bank or payment service provider instead. This gives you access to PayTo and Osko without the cost and complexity of becoming a direct participant. Ask prospective providers about their PayTo support, settlement timing, and ISO 20022 data capabilities.
Is PayTo cheaper than accepting card payments for remittance funding?
Yes. PayTo runs on account-to-account NPP rails with no interchange, scheme fees, or chargeback exposure, making it significantly cheaper than card acquiring. This advantage grows after 1 October 2026, when the RBA removes the ability to surcharge card payments, forcing card-reliant MTOs to absorb acquiring costs that PayTo avoids entirely.
When will Australia's NPP connect to India's UPI?
A direct NPP–UPI link for general MTO use is not yet live, but the foundations are converging through bilateral models like Singapore PayNow–UPI and the multilateral BIS Project Nexus, which includes UPI in scope. MTOs serving the India corridor should design their payout layer to accommodate real-time rails so they can adopt interoperability as it becomes available.
Do real-time rails change my AUSTRAC reporting obligations?
No — your TTR, IFTI, and SMR obligations remain the same regardless of the payment rail. However, real-time settlement removes the delay buffer that batch processing provided, so your transaction monitoring must run before payout release, and the Travel Rule requirements from 1 July 2026 apply to interoperable cross-border payments. You remain a reporting entity in the value transfer chain under the 2026 reforms.
What is the difference between Osko and PayTo?
Both are NPP overlay services, but they serve different purposes. Osko is the consumer-facing fast payment service customers use to send bank transfers, while PayTo is a pre-authorised payment agreement framework that lets businesses pull funds from a customer's account in real time with confirmation of funds. For MTO collections, PayTo is the more relevant service because it replaces the legacy direct debit model.
This information is general in nature and does not constitute legal advice. Consult AUSTRAC or a qualified legal professional for advice specific to your situation.
Ready to modernise your collection and payout stack? Explore our AML/CTF program tools to ensure your real-time monitoring keeps pace, compare live pricing on the rate board, and review our corridor guides to see where instant payout can give you an edge.
