Secret commercial arrangements between banks and global card schemes are unlikely to be scrutinised in the current round of hearings of the Hayne Royal Commission. In his opening presentation to the royal commission's third round of hearings, counsel assisting Michael Hodge did not indicate whether matters relating to card schemes such as Mastercard and Visa would be raised.The royal commission stirred some excitement last week that it might interrogate the Byzantine arrangements underpinning payments services to merchants.In a discussion paper issued on 14 May, the royal commission highlighted concerns that small businesses were vulnerable to the market power of the banks and card schemes in the provision of point of sale payments.The royal commission's apparent decision to skirt giving attention to pricing practices in the debit and credit card payments market might have something to do with an announcement made by the Payments System Board on Friday.Following its regular bi-monthly meeting the PSB indicated it was satisfied with the progress being made by banks to introduce least-cost routing on contactless debit transactions.Under current arrangements negotiated between the global card schemes and the banks, all contactless debit payments are automatically processed through high cost networks owned by Mastercard and Visa.The PSB and the Federal Government are agitating for banks to ditch the practice by giving merchants the choice to direct contactless payments through a cheaper processing service offered by Eftpos Australia.Even though a deadline issued to the banks by a parliamentary committee has now passed, the PSB has resisted calls for it to take stronger action."In view of industry progress, the board has decided that consultation on a standard requiring the provision of least-cost routing is not required at this time," the PSB said in a statement."This is consistent with the board's approach to regulate only where an appropriate industry solution is not forthcoming."Banking Day has learned that each of the major banks - CBA, NAB, Westpac and ANZ - gave assurances to RBA payments officials last week about their respective timeframes for embedding least-cost routing in their payments offerings to merchants.Each of the banks, including CBA, has promised to complete the necessary technical work to make least-cost routing available within the next 12 months.This represents a major retreat for CBA, which last year called on its banking peers to develop a "collective response" to the PSB's reform agenda.However, Banking Day has been told that CBA caved in to pressure from some of its largest retail business customers who are demanding that the bank allow them to direct contactless transactions to Eftpos.The PSB warned that a blunt regulatory solution might still be imposed on the industry if the rollout of least-cost routing is delayed."The board expects acquirers to deliver on the schedules that they have committed to and will reassess the case for regulation if there are signs of material delays," the PSB said."The board has asked staff to closely monitor pricing developments in the payment card market and whether smaller merchants are being provided reasonable access to least-cost routing by