Australian small business ombudsman Kate Carnell has weighed into the standoff between the Reserve Bank and major banks over planned reform of the contactless debit payment market.While each of the major banks has indicated they are moving to comply with the RBA's request to widen competition for processing of contactless debit transactions, only ANZ has indicated that merchants will be able to route payments through alternative platforms to the Visa and Mastercard systems towards the end of 2018.Under existing arrangements the major banks automatically route contactless debit payments through Visa and Mastercard, which each charge an average merchant service fee of 0.58 per cent.The RBA is agitating for banks to offer merchants the option to route these payments through lower cost platforms, including eftpos Australia. Carnell welcomed a recommendation from the David Coleman's economics committee last week, which calls on the Reserve Bank to take action against the banks if they do not remove entry barriers in the contactless market by the start of April."The average total merchant fee for a debit transaction is 0.26 per cent with eftpos and 0.58 per cent with Visa and Mastercard," she said."Shoppers aren't given a choice with pay wave, as banks don't allow merchants to choose the route through which contactless payments are processed."Carnell said she was encouraged by ANZ's commitment to add eftpos capability to its merchant terminals, but called on each of the banks to publish timelines for implementing the reforms.Carnell's intervention in the debate follows concerns raised by retail industry groups last week that the banks are trying to stall the reform process, while also stating publicly that they support eftpos' entry into contactless processing.Commonwealth Bank appears to be mounting the most resistance to the RBA push after calling on other banks to negotiate "a collective industry response" to the reforms.Carnell accused the major banks of exploiting consumers and merchants under the existing transaction processing arrangements."Consumers and small businesses are being exploited for utilising the convenience of tap-and-go," she said."Small businesses are unwilling tax collectors for banks and international credit card companies - they don't have the negotiating power of big business to get special deals."As we move towards a cashless economy it's vital that transaction fees are kept as low as possible."When they are implemented the RBA reforms will reduce the average cost of acceptance for small and medium size businesses across Australia.The Australian Retailers' Association estimates that the major banks stand to lose annual fee revenue of around A$290 million when the low cost eftpos system enters the market.However, a leading payments industry consultancy, McLean Roche, estimates that the savings to Australian businesses could be as high as $558 million a year.