Preparing Your Business for the PayTo Transition

Published 22 July 2026 · LocalPay Team

The Clock Is Ticking on Direct Debit

Australia's legacy Direct Debit system (Direct Entry) has served businesses for decades, but its shortcomings are increasingly costly: 3-5 day setup waits, opaque mandate management, high failure rates, and zero real-time validation. PayTo — built on the NPP — addresses every one of these pain points with a modern, API-driven mandate system.

Banks are actively migrating customers to PayTo throughout 2026. Merchants who delay transition risk disruption when legacy Direct Entry support is deprecated. The time to plan your migration is now.

Your 4-Step PayTo Migration Plan

1. Audit your existing Direct Debit mandates: Catalogue every recurring payment agreement — subscription billing, membership fees, instalment plans, supplier payments. Identify which are active, which are dormant, and which have high failure rates.
2. Integrate via LocalPay's PayTo API: Rather than building direct bank integrations, use LocalPay's unified API to access PayTo alongside BPAY and PayID through a single integration point. One technical implementation, three payment rails.
3. Notify and migrate customers in phases: Start with your highest-value or most-frequently-failing Direct Debit arrangements. Send clear, benefit-focused communications: "We're upgrading our payment system to give you instant mandate visibility and control in your banking app." Most customers will welcome the transparency.
4. Run parallel systems for 30 days: Keep legacy Direct Debit active during a transition window. Monitor PayTo mandate acceptance rates and failed payment rates against your Direct Debit baseline. You'll typically see a 60-80% reduction in payment failures within the first billing cycle.

The Immediate Benefits

• Instant mandate sign-offs: Customers authorise in their banking app in seconds — no paper forms, no postal delays.
• Zero bounce fees: PayTo validates account status and mandate authority before each payment, virtually eliminating dishonour fees.
• Future-proof compliance: PayTo meets the latest AP+ and Australian banking standards for recurring payments — essential as regulatory scrutiny of legacy Direct Debit increases.

Pair your PayTo migration with PayID for one-off instant payments and BPAY for high-value billing, and you've built a complete, future-proof Australian payment stack.