Author: Darren Tredgold, General Manager, Independent Steel Company
Open banking supplier payments are quietly reshaping how Australian trade businesses collect what they’re owed. In short, open banking supplier payments represent the biggest structural shift in B2B payment infrastructure since electronic funds transfer arrived decades ago.
For steel distributors, construction material suppliers, and tradies running lean operations, late payments remain a $115 billion annual crisis. Yet the convergence of Australia’s Consumer Data Right (CDR), the New Payments Platform, and PayTo is building a new foundation. So what does this mean for suppliers still waiting 60 to 90 days for money that should have landed weeks ago?
Australia’s Late Payment Crisis Hits Suppliers Hardest
The construction payment chain works like a waterfall. Money flows from property owners to head contractors, then to subcontractors, and finally to material suppliers sitting at the very bottom. As a result, steel distributors and building suppliers absorb the full impact of every upstream delay.
The numbers tell a brutal story. Around 92% of construction businesses reported overdue invoices in the past twelve months. Meanwhile, only 58.6% of small business invoices in the sector land within 30 days. Compare that to 84.7% in financial services, and the gap becomes painfully obvious.
On top of that, the consequences compound fast. A single payment default gives a business a 28% chance of closing within twelve months. Four or more defaults push that figure to 74%. Nearly half of construction and trade businesses have taken on credit facilities just to bridge cash flow while they wait.
This is precisely where open banking supplier payments enter the conversation. The root cause of most payment delays is not bad intent. It is a toxic combination of information gaps, manual processes, and payment rails that nobody bothered to modernise. Open banking supplier payments target each of these failures directly. Similar to how AI is transforming fraud detection, open banking attacks these systemic problems at their source.
Open Banking Supplier Payments: How the Framework Operates
Australia’s open banking framework runs on the Consumer Data Right. Under CDR, a business authorises a third party to access its bank data, including account balances, transaction history, and scheduled payments. That data flows through standardised APIs maintained under the CDR Data Standards, and third parties build practical tools on top of it.
Furthermore, Parliament passed the Treasury Laws Amendment (Consumer Data Right) Act 2024 with bipartisan support. This legislation introduced “action initiation,” which means accredited providers will eventually initiate payments and account switches rather than just read data. However, action initiation is not yet operational, and experts estimate meaningful payment initiation remains two to three years away.
Running alongside CDR is PayTo, the NPP overlay service that lets businesses initiate real-time payments from customer accounts with pre-authorisation. By mid-2025, PayTo had crossed one million settled transactions totalling AUD $612 million. Settlement takes a median of under five seconds, and the system runs around the clock.
Together, these two systems do something powerful. CDR handles data intelligence. PayTo handles money movement. For open banking supplier payments, this means suppliers assess a customer’s financial health before extending credit, then automate collection when terms come due.
5 Ways Open Banking Supplier Payments Benefit Trade Businesses
Real-time credit decisions replace guesswork. Traditionally, trade credit relies on backward-looking credit scores and financial statements that could be months old. Through open banking supplier payments, a steel distributor sees a builder’s live cash-flow patterns, existing debts, and available liquidity before extending 30-day terms. According to Equifax, CashScore products built on open banking data delivered an 8.2% lift in lending approvals with no additional default risk.
Payment automation kills manual friction. Around 70% of Australian finance teams still dedicate ten or more hours each week to manual accounts payable tasks. Consequently, reconciliation alone eats roughly 30% of finance team time. PayTo agreements embedded in trade credit terms auto-initiate payment on the due date. Monoova’s Automatcher product cuts reconciliation time by up to 99% through automatic invoice matching.
Cash flow forecasting goes predictive. By aggregating real-time bank data, open banking supplier payments enable AI-powered forecasting that predicts when payments will land based on customers’ banking behaviour rather than contractual terms. Mastercard launched Open Finance Business Solutions in Australia in 2025, offering real-time data feeds and automated bookkeeping for SMEs.
Invoice financing speeds up dramatically. Open banking lets lenders verify revenue and assess debtor quality in minutes rather than days. For construction suppliers with large receivable books, this converts 60 to 90 day invoices into immediate cash. Platforms serving the construction sector pay suppliers an average of 28 days earlier than traditional terms allow.
Transparency pressures slow payers. The Payment Times Reporting Scheme now requires large businesses to report their payment behaviour. From October 2025, the slowest 20% of payers face public identification. From April 2026, regulators can issue directions backed by civil penalties. Open banking supplier payments data feeds directly into this transparency push, as part of broader fintech shifts reshaping global payment systems.
What Comes Next for Australian Suppliers
Despite the promise, the full vision remains years away. The government plans to consult on sector-specific action initiation rules. Meanwhile, 61% of Australian SME decision-makers remain unaware PayTo even exists. Still, the trajectory is clear.
The UK offers a useful preview. Open banking launched there in January 2018 and by early 2026 had reached 16.5 million users with 351 million payments processed in 2025 alone. UK open banking payments cost up to 100 basis points less than card payments, which delivers material savings on B2B transactions. As the fintech landscape continues to evolve, Australian suppliers stand to benefit from a similar growth curve.
Australian fintechs are already building the connective tissue. Trade Ledger partnered with Bank of Queensland to digitise asset finance and claims to reduce origination costs by up to 60%. In addition, Fat Zebra’s acquisition of open banking startup Adatree in 2024 combined CDR data services with payment processing.
For trade suppliers who cannot afford to wait, open banking supplier payments already offer three immediate priorities. Adopting PayTo-enabled payment collection shortens settlement from days to seconds. Connecting with CDR-powered lending platforms speeds up invoice finance approvals. Integrating open banking data with accounting software delivers real-time cash flow visibility that the construction sector has lacked for decades.
Open banking supplier payments will not fix every broken link in Australia’s trade payment chain overnight. But by tackling information gaps, payment friction, and credit opacity at their source, this infrastructure gives suppliers something they have never had before: the tools to collect faster, borrow cheaper, and plan with confidence.