Real-time payments are taking off so why are small businesses still dragging their feet?

Australia’s real-time payments infrastructure has been in place for over five years, yet many small to medium sized businesses continue to rely on traditional batch-based payment methods.

The New Payments Platform (NPP), which launched in 2018, now processes over 1.3 billion transactions annually, with real-time payments accounting for one-third of all credit transfers in the country according to the Reserve Bank of Australia’s Payments System Board Annual Report 2023.  And while the original plan was to fully retire BECS (the old batch-based system) by 2030 and move all payments to the New Payments Platform (NPP), the Reserve Bank of Australia (RBA) recently admitted that full integration won’t happen by the deadline.

So with full integration delayed, what does this mean for small businesses?

Are small businesses slow to adopt Real-Time Payments?

For small businesses, the numbers paint a mixed picture. Real-time payments usage has grown by 21 per cent year-on-year, driven by both consumer and business transactions. PayID registrations, used to facilitate seamless instant payments, have also surged to 18.5 million as of 2024, showing increased interest in faster, frictionless transactions.

Yet, despite this growth, real-time payments still account for just 6 per cent of all transactions in Australia, according to the RBA. Many small businesses continue to use traditional electronic fund transfers (EFT) and card-based transactions, despite the availability of faster, more cost-effective alternatives.

While major banks have reported a significant increase in SMB adoption, with National Australia Bank seeing a 40 per cent rise in real-time payments by businesses in the past year, some small enterprises are still reluctant to transition.

What’s holding small businesses back?

In general, small businesses have been slow to adopt real-time payments because they believe existing systems are already fast enough for their needs. Unlike other markets where outdated infrastructure made real-time payments a necessity, Australia’s payment system has long been efficient. Electronic funds transfers (EFT) and card transactions remain the default, and for many businesses, they are sufficiently fast, reducing the urgency to switch, according to the RBA.

Beyond this, there is also a lack of awareness about real-time payments among small businesses. While consumers have embraced PayID for personal transactions, many businesses remain unaware of its full benefits, and only 30 per cent of small businesses have actively considered adopting real-time payments, according to a report by FinTech Australia.

Likewise, businesses that do consider switching often face integration challenges, many legacy accounting systems don’t yet support real-time rails, and implementing changes would require updating software, adjusting workflows, and retraining staff, making it an operational burden (NPP Australia, 2024).

Another factor slowing adoption is concern over security and control. Real-time payments are irrevocable, meaning once a transaction is sent, it cannot be reversed. While this eliminates chargeback fraud (a common issue with card payments), some small businesses worry about human error or misdirected funds, adding another layer of hesitation.

The business case for Real-Time Payments

For businesses that have embraced real-time payments, the benefits are clear. One of the most significant advantages is improved cash flow and faster settlements. Small businesses often struggle with delayed customer payments and slow settlement cycles, but real-time payments eliminate the typical one-to-two-day processing delay, giving businesses immediate access to funds and improving liquidity.

Cost reduction is another compelling factor. Card transactions come with interchange fees, which can be significantly higher for small businesses than for larger merchants. Real-time account-to-account payments bypass these costs, reducing transaction fees and improving margins.

Operational efficiency also improves with real-time payments. The NPP allows richer data to be attached to transactions, reducing the manual work required to reconcile payments in accounting systems. This is particularly beneficial for Small businesses using digital invoicing tools, as it enables automatic matching of payments to invoices (FinTech Australia, 2024).

Check Before You Switch

For small and medium businesses, getting paid faster can make a real difference, especially in today’s tight economic climate. However, accessing real-time payments isn’t always about the type of business you run. More often, it comes down to the tools you use behind the scenes.

Some accounting platforms and payments providers are already connected to the New Payments Platform (NPP), enabling features like PayID and PayTo. Others still rely on traditional EFT systems, where payments can take one to two business days, or longer, to land in your account.

This means two businesses in the same industry, with similar customers and revenue, could experience drastically different payment speeds based on which payments provider or bank they’re with. And that time lag affects everything, from cash flow and payroll to how quickly you can reinvest in stock or services.

Before making any changes to your payment systems or platforms, it’s worth asking some direct questions to your payments provider or bank:

• Do you support PayID?
• Are you PayTo-compatible?
• If not, when will that functionality be available?
• Are there any fees or setup steps involved?

Election 2025: Will policy shift the timeline?

With the federal election just around the corner, some are wondering whether payments reform will get a political push. So far, the answer appears to be no. Neither major party has made real-time payments a campaign talking point, and there’s been no formal commitment to accelerate the transition away from BECS. To date, neither Labor nor the Coalition has released any formal policy specifically addressing real-time payments or broader fintech regulation in their campaign platforms.

The Australian Treasury is progressing work on a new payments licensing framework, expected later in 2025, which may nudge providers toward modernisation. Still, any meaningful acceleration of real-time payments adoption is more likely to come from industry pressure than political will.

What small businesses should do now

The future may be uncertain, but that’s no excuse to be passive. Here’s how Small businesses can stay ahead:

• Audit your current payment systems: Find out if your platform supports real-time payments.
• Talk to your bank or provider: Push for PayID and PayTo compatibility.
• Plan for future upgrades: Even if the 2030 target slips, change is coming.
• Educate your team: Staff should understand how real-time payments work and the value they bring.

While the RBA’s updated timeline might have softened the urgency, the direction is still clear. Instant payments are the future and Small businesses who build awareness now will benefit.

Want more? Get our newsletter delivered straight to your inbox!  Follow Business Builders on Facebook , X , Instagram , and LinkedIn.