Least cost routing remains uncommon in the Australian payments landscape and needs to encompass recurring payments, Eftpos believes.
Matt Barr, chief product officer for Eftpos, told an industry conference that only "a very low percentage of transactions, currently around 5 per cent" are handled via least cost routing, a practice that typically works to the commercial benefit of Eftpos and merchants by diverting payments processing at the point of sale away from the more expensive networks run by international card schemes.
LCR "enables you to route debit tap and go transactions - the most common type of tap and go transactions - to the least cost network, in many cases Eftpos," Barr said.
"Currently more than 20,000 Australian merchants are routing."
The first commercial routing service in Australia was launched by Tyro in March 2018, while versions of routing are now offered by the major and several smaller banks."
But, Barr said, "There is a long way to go. Eftpos believes that to ensure all merchants have access to least cost routing the RBA should mandate a hierarchy of payments choice, with merchants at the top so they can control their costs."
Rodd called for an LCR mandate "for all debit transactions in all channels, unless the merchant specifically requests otherwise."
He said this mandate must apply to "dual network functionality, including Eftpos, on all form factors."
Barr, who recently joined Eftpos from MasterCard, was speaking at the Retail Live conference in Melbourne.