The National Australia Bank has hammered the first nails into the coffin of antiquated batched file processing for its business clients, revealing a major API integration with small business cloud software heavy Xero that ports directly to account-based payments functionality.

The integration is a major development for Xero’s more than 800,000 customers because it paves the way for similar integrations with other banks in the future.
However the new integration does not include payroll functionality and it's unclear when if it will.
Which is rather a pity, given the increasing reach and urgency of the Single Touch Payroll mandate from the Tax Office, especially around contractors and contingent workforce, a compelling reason to switch accounting or payroll providers because of the higher reporting burden that creates significant costs if done manually.
Xero does have STP compliance functionality, but its understood this is still separate to the new API.
Dubbed Xero NAB Payments, the new functionality between the banks and the software house removes the need for clients to download ABA files which then usually have to be sent back to the bank to process multiple transactions.
Typically, payroll and accounts payable are paid in chunks rather than one by one because businesses like to nett-up their cash positions at set times rather than dripping out payments one by one.
Although necessary until now, the business community has grown increasingly frustrated by the manual nature of ABA files because more modern local cloud software like Xero, MYOB and Reckon already has direct payments functionality built in for other payment instruments and schemes.
At the same time, for smaller businesses paying suppliers on time and avoiding payment instruction errors is especially important because it can affect their credit rating and cost of borrowing.
Executing payment instructions through Xero had been one of the platform’s most requested features to date said Ian Boyd, the software maker’s Australian financial industry director.
Boyd added that business owners wanted to “manage their money more efficiently with real-time, connected, and accurate information.”
“Together with NAB, we’ve designed this solution so that small businesses can pay bills securely and seamlessly, spending less time on admin and more time on what’s important to them,” Boyd said.
“They can do this knowing that their bills have been taken care of and suppliers have been paid.”
NAB’s executive general manager for business solutions, Andy Kerr said the integration significantly streamlined the payments experience ”whilst keeping approvals safe and secure via the NAB mobile app.”
NAB’s new integration follows hot on the heels of bill payments behemoth BPAY launching a swag of new functionality earlier in the year also in part targeted at automating and speeding-up batched transactions.
Xero said clients will be “able to add Xero NAB Payments to their Xero subscription the next time they pay their bills from within Xero.”
[This story has been updated after Xero clarified payroll functionality was included in the current release.]