> ## Documentation Index
> Fetch the complete documentation index at: https://docs.rc.cleverhub.co/llms.txt
> Use this file to discover all available pages before exploring further.

# PayTo vs. Direct Debit

> How PayTo improves on traditional direct debit in Australia: real-time settlement, customer-managed agreements, and greater transparency and control.

For decades, Australian businesses have collected recurring payments using **direct debit**. **PayTo** is the modern replacement, built on the New Payments Platform (NPP). Both let you pull payments from a customer’s bank account on a schedule, but PayTo fixes the long-standing weak points of direct debit: slow batch processing, permissions held by the business rather than the customer, and little visibility for the customer. This page compares the two.

<Note>
  Both PayTo and direct debit are *pull* payments, where the business collects, rather than the customer sending. For the underlying idea, see [push vs. pull payments](/platform-overview/payment-concepts/push-vs-pull).
</Note>

## The problems with traditional direct debit

Direct debit has worked for a long time, but it carries three main drawbacks:

<CardGroup cols={3}>
  <Card title="Slow settlement" icon="hourglass-half">
    Payments are processed in batches and can take 1–3 business days to clear.
  </Card>

  <Card title="Permission held by the business" icon="file-signature">
    The customer signs an authorisation that the business keeps, so changing or cancelling it means contacting the business.
  </Card>

  <Card title="Little visibility" icon="eye-slash">
    Customers often cannot easily see which direct debits are active on their account without checking statements.
  </Card>
</CardGroup>

PayTo addresses each of these.

## Side-by-side comparison

|                      | **PayTo**                                                       | **Direct debit**                                      |
| -------------------- | --------------------------------------------------------------- | ----------------------------------------------------- |
| **Customer control** | High; the agreement lives in the customer’s banking app         | Low; changes require contacting the business          |
| **Speed**            | Instant, real-time over the NPP                                 | Batch processed; 1–3 business days to settle          |
| **Authorisation**    | Approved by the customer in their banking app, with full detail | The customer signs a form the business holds          |
| **Transparency**     | Every active agreement is visible in the banking app            | Limited; customers check statements themselves        |
| **Security**         | Approved inside the bank’s secure environment                   | Depends on how the business handles the authorisation |
| **Best for**         | Recurring payments needing transparency and instant settlement  | Stable, traditional recurring billing                 |

### Who holds the permission

This is the biggest difference. With direct debit, the business keeps the customer’s authorisation, so the customer has to get in touch to change or stop it. With PayTo, the customer’s bank holds the agreement, and the customer can view, pause, or cancel it themselves in their banking app at any time. That shift puts customers firmly in control.

### Speed

Direct debit is processed in batches, so a payment can take one to three business days to clear. PayTo settles each payment in real time over the NPP, so the money is in your account in seconds, improving your cash flow and giving you an instant, accurate view of what has been collected.

### Transparency and trust

Because a PayTo agreement is approved inside the customer’s banking app (showing your business name, the amount, the frequency, and the duration before they confirm), customers know exactly what they are agreeing to. That openness tends to reduce disputes and cancellations compared with a direct debit the customer may have forgotten about.

<Note>
  Hello Clever facilitated Australia’s first PayTo transaction, in partnership with Commonwealth Bank, an early milestone for real-time recurring payments in Australia.
</Note>

## Which should you use?

<Tip>
  For most new recurring billing, PayTo is the better choice: faster settlement, happier customers, and less dispute handling. Direct debit may still suit businesses with established direct debit arrangements that are not ready to move, but PayTo is the direction the market is heading.
</Tip>

<CardGroup cols={2}>
  <Card title="Learn how PayTo works" icon="arrows-rotate" href="/platform-overview/payment-concepts/payto-recurring">
    The full workflow, from creating an agreement to collecting each payment.
  </Card>

  <Card title="See the agreement fields" icon="list-check" href="/platform-overview/payment-concepts/payto-agreement-spec">
    A field-by-field guide to configuring a PayTo agreement correctly.
  </Card>
</CardGroup>


## Related topics

- [PayTo for Recurring Payments](/platform-overview/payment-concepts/payto-recurring.md)
- [PayTo Agreement Specification](/platform-overview/payment-concepts/payto-agreement-spec.md)
- [Account Transfer and Direct Debit in Japan](/platform-overview/payment-concepts/account-transfer.md)