How PayTo is changing the payments game for telcos

For Australia's telecommunications companies, payment processing stands as a critical yet cumbersome function—and traditional billing mechanisms like BPAY and bank direct debit are starting to show their age. These outdated payment methods not only impose significant operational burdens on telcos, they're damaging the customer experience too.

PayTo, a modern digital payment solution that powers fast and secure payments between merchants and customers' bank accounts, has emerged as a clear solution to this. But in order to understand its benefits, it's worth shedding light on the current reality for telcos.
 
Telcos' billing burdens

From the glacial transaction times to manual entry errors and costly card payment surcharges, existing billing systems are ill-equipped to meet the demands of a fast-paced, financially conscious, and digitally savvy consumer base.

And as the cost of living rises, so too do the challenges for consumers to pay their bills on time. This leads to an uptick in late and failed payments, which not only affects cash flow for telcos but also triggers expensive collections processes. Moreover, the 2-3 business days it takes to settle a payment is a relic of the past and unfit for the velocity of the modern economy. This delay is particularly problematic for telcos when they rely on timely revenue to manage operational expenses, investments in infrastructure, and service improvements.

On top of this, the transaction fees banks charge for traditional billing systems like BPAY is typically more than double the cost of real-time alternatives, such as PayTo. For Telcos, the utopian state is for a customer to sign up to a direct debit, but when a bank payment fails, the bank provides no data or reason why, which leaves Telcos to either retry the payment or send reminders. Both instances introduce friction to the customer-merchant relationship.

Refunds and erroneous payments are equally problematic. With BPAY, telcos often lack visibility into the underlying payment source, leaving telcos to manually retrieve banking details from the customer to issue refunds. Moreover, requiring customers to enter a 12-20 digit customer reference number onto a mobile screen can result in errors. This not only puts further pressure on customers but impacts operational efficiency for telcos too.

For all intents and purposes, billing methods like BPAY and bank payment processing networks (BECS) delivered on what they set out to—but as the economy evolves, telcos should look to alternative billing methods that benefit both them and their customers.
 
BPAY walked so PayTo could run

The nirvana for telcos is to enrol customers in direct debit arrangements, as this is the most efficient method of collection. However, many customers tend to avoid this due to a lack of transparency and control over the payment, leading to mistrust. But this is where PayTo comes in. 

For customers, PayTo provides complete visibility and control over their PayTo agreements right from their digital banking app—and enables them to make instant payments at any point in time in a transparent and secure manner. This builds trust, giving customers comfort to opt for recurring billing and confidence that when paying manually funds are received on time. 

PayTo translates into benefits for Telcos, too.

One of the prime advantages of PayTo is real-time payment processing, which markedly improves cash flow while slashing the time spent on administrative tasks. With Telcos handling massive transaction volumes—ranging from monthly bills to prepaid top-ups—faster processing ensures higher efficiency and accurate account balances, minimising frustration and friction tied to delayed payments. 

Moreover, the rich data associated with a PayTo transaction streamlines reconciliation and enhances reporting capabilities, critical for telcos given their complex, high volume billing structures. This extends to detailed error codes, which enable telcos to programmatically deal with failed or erroneous payments with greater nuance—a task that typically creates a significant manual workload to reconcile.

Another compelling factor is the fixed transaction costs that come with PayTo's direct account-to-account payments. In an economy where reducing operational expenses is a top priority, optimising your payment mix is a critical lever. Adding to the financial advantages, the requirement for explicit customer authorisation via digital banking apps helps to combat the risks of disputes and fraud, bolstering consumer trust. 

In an industry where customer trust is pivotal to long term profitability, these improvements can serve as vital differentiators. PayTo's integration emerges as a strategic win for telcos on multiple fronts.
 
A better way to pay for telco customers

With faster processing times, enhanced security, and lower costs, PayTo offers a superior payment experience—particularly in a sector where customer experience can be a key differentiator.

PayTo is revolutionising payments by offering timely, effective solutions for telcos, enhancing efficiency, and supporting innovation. With the retirement of BECS (traditional bank direct debit) by 2030 and the requirement for telcos to migrate to the NPP (Australia's real time payments infrastructure that powers PayTo), early adopters will gain immediate benefits while future-proofing their tech as real-time payments become the new standard for Australian businesses. It's creating a foundation for telcos and other billers to build upon, creating custom payment solutions tailored to their customers' needs now and in the future.