In a move likely to deliver big fee savings to thousands of retailers, National Australia Bank has begun to roll out merchant choice routing of contactless debit transactions.NAB is the last of the major banks to deliver a form of least cost routing to its merchant customer base after ANZ, Westpac and CBA launched similar services earlier this year.While some small business leaders had expected NAB to develop a more comprehensive service offer than its rivals, its service will only be made available to merchants who subscribe to specific plans and who use a mobile Ingenico terminal.Such limitations might disappoint RBA payments officials who have been urging all merchant acquiring banks to optimise the delivery of least cost routing to merchants across the country.The RBA's Payments System Board has led the push to embed the service in Australian banking practice in a bid to lower costs borne by small businesses when they accept contactless debit card payments.Under the new routing services offered by the banks, merchants can elect to route contactless debit transactions through the Eftpos network rather than processing platforms operated by Visa and Mastercard.The fee savings are be significant for merchants whose average transaction value exceeds $25.Merchants electing to direct high value contactless transactions to the Eftpos network are likely to incur lower fees because Visa and Mastercard generally charge more to process high value debit payments.Small business leaders have panned the four big banks in the last month for being slow to implement least cost routing in Australia and failing to highlight the benefits it offers many retailers.Mark McKenzie, chair of the Council of Small Business Organisations Australia (COSBOA) said banks needed to do more to explain least cost routing to customers and simplify their merchant fee structures."There's not enough transparency in the way banks explain merchant fees to business customers," he said."The banks are hiding behind the complexity of the system and I fear that they could be gaming it."McKenzie said he was hopeful that banks would eventually adopt a purer form of least cost routing that would enable merchant terminals to automatically direct contactless transactions to the cheapest processing network.None of the routing services rolled out by the major banks this year deliver such functionality.Instead, merchants who adopt least cost routing are required by their bank to select the network (Visa, MasterCard or Eftpos) through which they want to process contactless transactions."What we are getting is a dumb form of least cost routing, rather than the 'dynamic version' where merchant terminals are programmed to instantly detect the cheapest processing network for each individual transaction," said McKenzie.NAB recently amended its standard merchant agreement to include new terms and conditions that will apply to merchants who decide to take up the new service.A bank spokesperson confirmed to Banking Day that the service was now available to business customers with a NAB-issued merchant terminal.NAB is offering the service on an opt-in basis that resembles the offers of the three other major banks.Rather than bundling least cost routing with