Blog

01Jul, 2019

What is least-cost routing?

Least-cost routing is an initiative that aims to reduce payment costs and promote competition in the Australian debit card market.  It allows merchants to choose which network they send debit transactions for processing, allowing them to select the network that costs them the least to accept. For many merchants, this is not an option with debit card transactions (from Chq and Savings accounts via Eftpos) often processed by the more expensive credit card processing network (Visa and Mastercard).

The high adoption of ‘Tap and Go’ technology in Australia has been a key driver of change with these smaller transactions under $100 often processed as credit card transactions at an increased cost to merchants.  Least-cost routing aims to allow merchants to choose which processing network is used to process different transactions to reduce costs to merchants.

 

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