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Least cost routing “in better position than ever”, says COSBOA

Business organisations seeking urgent action on debit payments are cautiously optimistic about the ACCC’s decision on 9 September to green-light the merger of BPay, eftpos, and NPP Australia. The merger will go ahead on the condition that, for a term of four years, eftpos do everything in its control to make least cost routing available and promote it, as well as maintain the availability of the eftpos payment system.

Least cost routing will ensure that debit card transactions, whether in-person, online, or with a digital wallet, are processed through the network with the lowest cost to the small business merchant.

Council of Small Business Organisations CEO Alexi Boyd said “the reason we’re feeling positive about this is, as a result of the undertakings, we are arguably in a better position to get least cost routing mandated as the default widely implemented to get debit card merchant fees down, which will greatly assist small business recovery from the pandemic.”

“The ACCC has listened to our concerns and strengthened the undertaking to address them. The time period has been extended from 3 to 4 years and an auditing process is required to ensure Least Cost Routing is the default offered to all debit card transactions. So the onus is now squarely on the new entity, as well as the major banks, to act in accordance with the undertaking. COSBOA will be monitoring the actions of the merged entity over the next 4 years and look forward to seeing the outcomes of the audits that will be undertaken.”

Business organisations like COSBOA had previously expressed concern that the merger of the payment systems would shift focus away from least cost routing and derail its implementation. In its submission to the ACCC, COSBOA sought to gain a commitment to least cost routing, as well as other actions such as monitoring small business costs and keeping the least cost routing option mandated, that which is eftpos.


Australasian Convenience and Petroleum Marketers Association CEO Mark McKenzie said “We are very pleased that the ACCC saw fit to impose this undertaking. The implementation of least cost routing will have a substantial impact for ACAPMA’s members; the service station industry pays $116 million a year just in processing debit card payments, and $62 million of that would be avoided with least cost routing.”

Mr McKenzie added “We remain concerned about the LCR agenda and will continue to press for appropriate changes in the lead up to the RBA’s final decision in respect of the current review of retail payments regulation, and the Federal Government’s response to the Farrell review of the future regulation of payments in Australia. Regarding the latter, we note the the significant emphasis placed by the author on the need to ensure that the system meets the needs of Australian businesses and their customers.”

The Australian Association of Convenience Stores (AACS) CEO Theo Foukkare said “After more than 4 years of advocacy by a coalition of peak industry bodies, we are very happy with the ACCC undertakings attached to the merger approval concerning Least Cost Routing (LCR). Our members are predominantly small business operators who in the main have been denied easy access to LCR implementation. Our members need to focus on rebuilding after an extremely difficult 18 months, not get stuck in the minefield of understanding how to save on their merchant fees. Card not present and online payments continue to surge, so it is a sigh of relief that there will be significant investment by the merged entity to ensure that this comes to life.”

Restaurant and Catering (RCA) CEO Wes Lambert said “R&CA will continue to advocate for the best outcomes for the hospitality industry and that means an ongoing dialogue with the ACCC to ensure that small business is not treated unfairly by this merger. Hospitality needs all the support that it can get during this incredibly tough time and the lowest possible merchant fees for card transactions is a great start.”

MGA Independent Retailers CEO Jos de Bruin said “MGA TMA has strongly advocated for many years to reduce the unsustainable cost burden of merchant transaction fees which costs our sector – family and privately owned Supermarkets, Liquor stores and Timber and Hardware – more than $88million in card transaction fees each year.

“This is a cost that we believe can be reduced by 40% with the immediate adoption of Least Cost Routing (LCR) by the big banks. We are encouraged that the ACCC has imposed this undertaking.The implementation of LCR will greatly assist our members to reduce this excessive cost and to enable savings to be invested back into their businesses, including employing more staff”.



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