Paying Australian employees: bank files, payment rails and who may move the money

The workhorse: BECS direct entry and the ABA file

The Bulk Electronic Clearing System (BECS, "direct entry"), administered by AusPayNet, is still Australia's primary system for account-to-account payments — the RBA lists salary payments among the critical flows it carries. Payments sent to customers' accounts are direct credits (that's payroll); payments collected are direct debits; and per AusPayNet the system, though generally used for day-to-day payments, is available for payments up to $100 million.

An organisation that wants to originate direct credits has three access routes, per AusPayNet: join BECS as a member and obtain a BSB; enter a commercial agency arrangement with a BECS member and use one of its BSBs; or — the route most non-ADIs take — be sponsored by a BECS member as a Direct Entry User and receive a unique user ID. In practice this is bank sponsorship: DE Users usually get their own bank to sponsor them in, and sponsoring banks are responsible for their DE Users following the BECS rules.

The file itself — universally called the ABA file — follows the record layout in the BECS Procedures (currently Version E071, effective 1 September 2025):

• One type-0 descriptive record per user. This header must carry the name of the user's financial institution as an approved FI abbreviation (the mnemonic from AusPayNet's BSB Numbers in Australia publication), the user's preferred name, a description of the entries (the Procedures' own example is "Payroll"), and — at character positions 57–62 — the six-digit User Identification Number "assigned by AusPayNet and User Financial Institutions". That number (your bank may call it a DE User ID or APCA number) is what the sponsorship gets you.
• Type-1 detail records — one per credit or debit item, with the details needed to post to each employee's account.
• One type-7 file total record per user, showing the credit, debit and net totals and the count of detail records. Fields across all record types are defined out to character position 120.

Third-party file preparation is anticipated by the rail's own rulebook: a Bureau — "a person which either creates a File on behalf of a single User… or creates Multi-User Files on behalf of more than one User" and lodges them — is a formally defined BECS role. Payroll software preparing the file while the employer's bank executes it is the pattern the rules were written around.

The real-time alternative: NPP, Osko and PayTo

The New Payments Platform (NPP), launched February 2018, is Australia's open-access fast-payments infrastructure: near real-time funds availability to the recipient, 24/7, with richer remittance information than the older systems. Osko (owned by BPAY) is its account-to-account overlay service, PayID its addressing service (linking an account to a mobile number or email), and PayTo its consent-and-mandate service — storing payment authorisations so the platform supports recurring, business-initiated payments as the designed alternative to direct debit. NPP Australia itself identified payroll, superannuation and PAYG as areas likely to benefit from the platform's structured, data-rich payments.

NPP access comes in five participation types — full participant, settlement participant, identified institution, connected institution, and overlay service provider — and a payroll originator in practice generally reaches the NPP through an institution holding one of those roles, much as BECS is reached through a sponsor.

Who may actually move the money?

This is the part operators skip and lawyers don't. The rails above answer how money moves; three regulatory regimes answer who may hold and dispatch it. All three turn on how a specific money-flow structure maps onto broad statutory definitions — so everything in this section carries a deliberate "generally / may / depending on structure", and none of it substitutes for advice.

Holding the money: banking business and ADIs

Under the Banking Act 1959, a body corporate commits an offence if it carries on banking business in Australia and it is not the Reserve Bank, not an ADI (authorised deposit-taking institution), and holds no exemption determination from APRA under section 11 (s 8(1)). One precision worth knowing: the core "banking business" definition (s 5, limb (b)(i)) requires both taking money on deposit and making advances — so merely holding client money, without lending, is not automatically banking business under that limb; whether a given structure is caught elsewhere in the definition is a structure-specific question. Separately, APRA has discretion to determine that providing a purchased payment facility (stored value used to make payments) constitutes banking business, and PPF providers are a special class of ADI under APRA's APS 610 that must hold high-quality liquid assets equal to their stored-value liabilities.

Paying the money: non-cash payment facilities and the AFSL

A facility through which a person makes payments otherwise than by physically delivering cash is a non-cash payment (NCP) facility — a financial product under the Corporations Act (s 763A(1)(c), s 763D). ASIC's Regulatory Guide 185 expressly lists payroll cards and funds transfer services among its examples, and a person carrying on a financial services business issuing or dealing in such a facility generally must hold an AFS licence unless an exemption applies (s 911A). The exemptions that come up in payroll analysis:

• Single payee — a facility that only allows payments to one person is excluded (s 763D(2)(a)(i)).
• Electronic funds transfer (reg 7.1.07G) — limited to issuers that are ADIs or payment-system operators, and it requires, among other limbs, that there be no standing arrangement with the client to transfer funds that way. How that limb applies to a recurring payroll engagement is an interpretation question for legal advice.
• Low-value NCP relief — now ASIC Corporations (Non-cash Payment Facilities) Instrument 2026/167, which in March 2026 remade the former Instrument 2016/211 and is itself repealed on 1 April 2031. It is capped at $1,000 available per person and $10 million across the facility class — thresholds a payroll flow of any real scale generally exceeds immediately.

No payroll-specific ASIC relief instrument was located. Where the employer keeps its own account at an Australian ADI and net pay leaves from that account — with software or a bureau only preparing the file — the regulated payment facility is generally the bank's product and the employer is its customer; an employer paying its own staff that way is generally not, on its face, providing a financial service to anyone. Treat that as the general position rather than a stated exemption: floats, pooled accounts or paying on behalf of others change the analysis.

Transferring value for others: AML/CTF and AUSTRAC

Since 31 March 2026, the AML/CTF Act catches paying money on behalf of others through its transfer-of-value designated services: accepting an instruction to transfer value on behalf of a payer (as ordering institution, item 29), making transferred value available to a payee (as beneficiary institution, item 30), passing on transfer messages (item 31), and operating a remittance network platform (item 32A). The older "designated remittance arrangement" framing is gone — guidance built on it is stale.

A registrable remittance service is, broadly, an item 29 or 30 service provided by a person other than a financial institution or casino at or through a permanent establishment in Australia. Providing one unregistered is prohibited (s 74), with three registration tiers on AUSTRAC's Remittance Sector Register: remittance network provider, independent remittance dealer, and remittance affiliate. A business that is a remitter cannot start providing remittance services before AUSTRAC approves its registration, and must apply to enrol no later than 28 days after the day it starts providing a designated service.

The payroll-decisive provision sits in the AML/CTF Rules 2025, not the Act: rule 1-8(3) excludes from the definition of "transfer of value" itself a transfer of money made in the course of performing administrative services for a client that is an employer, where the services relate to paying, on the employer's behalf, salary, wages or other benefits to its employees, salary-sacrifice arrangements, or superannuation contributions for its employees — provided no physical currency is received from the payer or made available to the payee. A transfer inside the carve-out is not a "transfer of value" at all, so the remittance items never arise for it. But mind the edges:

• It covers payments to employees only — contractor payouts on behalf of a client are not covered.
• The client must be an employer, and "administrative services" is undefined — whether a given offering fits is a characterisation question.
• Cash legs break it: physical-currency payroll sits outside the exclusion (and squarely inside the reporting regime).
• It is AML/CTF-only — it says nothing about the AFSL or banking-business analysis above.

So the takeaway is not "payroll providers are exempt from AUSTRAC registration". It is: these specific employer-payroll flows generally sit outside the transfer-of-value net, and anything else a provider does with money should be mapped against the rules, flow by flow, with advice.

Super rides a separate rail

SG contributions do not travel in the net-pay file. They move under SuperStream: payment and data sent electronically in a standard format, linked by a unique payment reference number (PRN), with payment and data sent on the same day. Employers meet the standard through SuperStream-compliant payroll software, a commercial super clearing house, or fund channels — and note the ATO's free Small Business Superannuation Clearing House closed permanently from 1 July 2026 as part of the Payday Super reform.

Payday Super also changed the clock: from 1 July 2026, SG (12% of qualifying earnings) is payable for each payday instead of quarterly, and contributions must be received by the employee's fund within 7 business days of paying the employee. Receipt, not dispatch, is the test — which makes payment-rail latency an SG-compliance variable for the first time. Funds now have 3 business days to allocate or return contributions, and the ATO has noted that contributions made through payroll systems or clearing houses using the NPP could reach the fund the same day. Miss the window and the redesigned, ATO-assessed super guarantee charge applies, with daily-compounding interest.

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