The Reserve Bank of Australia’s 25-basis-point trim on 20 May 2025 nudged the cash rate down to 3.85 percent, its lowest setting in two years. Headlines focused on mortgage relief, yet the bigger subplot sits inside the plumbing of account-to-account (A2A) payments.
Cheaper money slashes the opportunity cost of float—the few hours or days during which merchants and billers wait for funds to clear. That is exactly the friction PayTo, the request-to-pay overlay on the New Payments Platform (NPP), was built to erase.
Why the cash-rate move matters
- Float math flips – When overnight cash earns less, merchants gain little by hanging on to batch files and delayed settlement. Real-time clearing becomes the cost-neutral default.
- Lower funding spreads – BNPL providers and invoice-discounters who rely on warehouse lines see their borrowing costs fall, narrowing the price gap with PayTo’s straight-from-bank-account pull.
- Consumer sentiment – A rate cut usually lifts retail spending; friction-free checkout captures the impulse faster than card rails that still settle on next business day.
Momentum was already building
Westpac IQ reported in February that the NPP now carries 35 percent of all Australian A2A transfers, up from barely 10 percent five years ago. The same note argued that business adoption of PayTo is the next “unlock” and could push real-time share into the high thirties by Christmas. Add a cheaper cost of capital, and that 40-percent milestone starts to look conservative.
AusPayPlus data underlines the trend: 1.63 billion NPP transactions in 2024, a 23-percent jump year on year, with 140 million payments now coursing through the platform each month. Every extra percentage point of A2A migration drains volume from the legacy BECS direct-debit file, which still processes trillions but is slated for retirement in 2030.
The merchant lens
Picture a subscription gym. At a 4 percent cash rate, the gym’s bank earns some float income while direct-debit files clear overnight; the gym eats settlement lag as the cost of doing business. At 3.85 percent, and possibly lower later this year, that float premium shrinks. Switching to PayTo means:
- instant confirmation that a mandate exists
- real-time funds availability checks
- no chargeback risk once the payer approves the agreement in their banking app
With Westpac already piloting dynamic virtual cards that ride PayTo rails for corporate spend, CFOs can see the operational upside: no plastic, file uploads, or reconciliation pain.
Friction beats fees
PayTo’s wholesale scheme fee hovers around 4 cents per transaction, projected to dip further as volumes rise. Card interchange on the other hand averages 50–80 basis points for domestic debit. When the funding benefit of float evaporates, merchants care more about per-transaction cost and chargeback risk than about one-day access to cash. PayTo wins on both counts.
The road to a tipping point
- Banks hurry to switch on outbound PayTo – Some still support only inbound agreements. Competitive pressure will sharpen once rivals start marketing PayTo instalments at the checkout.
- Platforms bake it in – Accounting and billing SaaS can embed PayTo APIs, offering small businesses instant settlement at card-beating economics.
- Regulators nudge – The RBA wants the 1970s-era BECS file gone by 2030. Each rate-cut cycle strengthens the argument that now is the cheapest migration time.
Watch these metrics
- Mandate growth – AP+ will release fresh PayTo agreement numbers in July. Anything above one million live mandates will confirm acceleration.
- Cost pass-through – Large utilities and telcos may start sharing their PayTo fee savings with customers as bill-payment discounts, turbo-charging awareness.
- Deferred debit cannibalisation – If PayTo eats into BNPL’s low-value instalments, expect card schemes to lobby for higher transaction caps on their own A2A propositions.
Bottom line
The RBA’s rate cut did more than soothe mortgage payers. It quietly removed one of the last economic excuses for sticking with overnight direct-debit files. Add growing consumer familiarity with real-time payments and a looming 2030 BECS shutdown, and PayTo now looks poised for its breakout year—perhaps topping 40 percent of all account transfers well before the next Melbourne Cup. The smart money is already rewriting payment flows before the float advantage disappears for good.