Least-Cost Routing

Lower your card transaction costs with LCR

The Victorian Chamber is committed to working with all levels of government to remove barriers to business growth. With the impacts of COVID-19 affecting many businesses bottom line, every dollar counts. One of the ways we are achieving this is working with the Reserve Bank of Australia (RBA) and financial institutions to share member feedback and advocate for the reduction of banking fees associated with tap-and-go payments.

When a customer uses tap-and-go to make a payment, a business often has no visibility if eftpos, Mastercard or Visa is processing the payment – all of whom charge different amounts.

This is normally decided by the business’ bank. Businesses can talk to their banks and request that tap-and-go be processed in the cheapest way – setting up a process called Least-Cost Routing.

As more and more customers turn away from cash in the post-coronavirus economy, this is going to become a simple way for businesses to keep transaction costs down. Even small savings will make a difference for businesses in the current economic environment.

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Least-Cost Routing (LCR), also known as Merchant Choice Routing, enables businesses to choose the payment network that delivers the lowest costs for accepting most contactless transactions from dual network debit cards. 
Speak to your bank or card payment service provider and ask them to give you a proposal that incorporates Least-Cost Routing into your current arrangements. Download the Victorian Chamber’s checklist of how to approach your bank.

The Reserve Bank of Australia has been advocating for Least-Cost Routing to be rolled out for several years. It believes Least-Cost Routing will boost competition in the payments market and help drive down banking costs for businesses. Read more from the RBA on its website.

In addition, the Australian Small Business and Family Enterprise Ombudsman has called on all banks to make Least-Cost Routing available to small business as a matter of urgency. A statement from the Ombudsman can be found on the ASBFEO website

Potential savings will vary from business to business. Your business could save up to 40%* on contactless debit card service fees if your bank passes through the benefits.

*40% saving is based on numbers provided in the RBA Bulletin March 2020. Subject to your Acquirer terms and their passing through eftpos’ package wholesale pricing.

  1. An independent supermarket with an average basket size of $44 could save $26,391 per annum on the cost of debit transactions.
  2. An independent petrol station with an average transaction size of $44 could save $13,196 per annum on the cost of debit transactions.
  3. An independent newsagent with an average transaction size of $36 per annum could save $3,167 per annum on the cost of debit transactions.

Source: eftpos Australia

No. Currently Least-Cost Routing only applies to dual network debit cards in Australia.
Yes, for eftpos transactions, chargeback rights cover the full range of losses required by the ePayments Code.
Least-Cost Routing is already operational across thousands of merchants in Australia, with no discernible difference in technical or payment outcomes. It has also been introduced in numerous other countries without any known, overt technical issues.

No, they will not. While insurances on debit cards are very rare, currently available information suggests all the insurances offered are done so at an account level rather than a network level. Consumers should therefore still be eligible for insurance benefits offered on dual network cards.

Source: eftpos Australia

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If you are having difficulty getting your bank to switch you over to Least-Cost Routing (LCR), please contact us on:


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