eCommerce and online retail merchants in Australia have experienced a sharp increase in PayTo payments, growing 301% over the past six months. This shift reflects heightened interest from retailers in reducing transaction fees and enhancing cash flow by using account-to-account payment methods that bypass established card networks.
Retail shift
PayTo, which operates through Australia's New Payments Platform, enables direct fund transfers between consumer and merchant bank accounts. The report from Zepto shows that account-on-file now comprises 89.88% of PayTo agreements within eCommerce and online retail. Retailers are opting for this model as a cost-effective substitute for the traditional 'card on file' approach favoured for repeat transactions and one-click purchases.
Over the last six months, the sector processed 305,842 PayTo payments, with a settlement rate of 98.9% excluding cases where funds were insufficient. The median settlement time for these transactions was 4.94 seconds, addressing retailers' demand for real-time access to funds.
Consumer response
Growth in consumer adoption was notable, with the number of new PayTo agreements rising by 120% in the same period. Return rates and follow-on purchases have also been strong. Around 48.66% of PayTo customers made a repeat purchase within a median timeframe of 11 days, suggesting a link between the payment method and customer loyalty.
Merchant incentives
Merchant-led incentives have significantly influenced consumer uptake. One major eCommerce brand implemented a 5% discount for payments made using PayTo during a peak sales period. This led to a tenfold increase in daily PayTo transactions, totalling AUD $1.2 million in a single day. Notably, half of these transactions were from customers using PayTo for the first time. Of these, 63% returned for an additional purchase.
Banking app barriers
Despite this momentum, retailers are facing obstacles at the point of payment authorisation. The report highlights that user experience in banking apps is a decisive factor in checkout conversion rates for PayTo payments. Some banks have presented barriers such as poor navigability, unclear steps for authorisation, or lack of in-app support. Where such experience was judged to be poor, conversion rates dropped as low as 37.98%.
At the opposite end, banks that improved their PayTo interfaces saw substantial improvements. One bank, after introducing real-time prompts and deep links, saw conversion rates climb from 40% to 70%.
Merchant outlook
The findings underscore that the broader success of PayTo adoption depends not only on retailer initiative but also on the ability of banks to deliver a smooth customer journey from checkout to account authorisation. The trend towards account-on-file use indicates a move away from existing card-based payment structures, which could further impact transaction costs for online merchants.
"Incentives, when combined with clear consumer education and a seamless user experience, are highly effective at driving PayTo adoption in eCommerce. But incentives alone aren't enough. To truly unlock the full potential of PayTo, we need consistent standards across banks, merchants, and platforms. That means intuitive, real-time authorisation in banking apps, prominent positioning at checkout, and ongoing education to build trust and confidence among consumers," said Chris Jewell, President & Co-Founder, Zepto.
