Major banks are facing a regulatory crackdown on a controversial debit card practice that automatically routes contactless payments to expensive networks owned by Mastercard and Visa.New data on merchant service fees published by the Reserve Bank this week show that debit systems owned by Mastercard and Visa charge merchants around 32 basis points more than the eftpos network on debit card transactions.Card-issuing banks automatically direct contactless payments to the Mastercard and Visa networks because they harvest bigger fees from merchants.The practice has inflated transaction costs incurred by millions of small businesses and consumers who each have no way of routing contactless payments through the low-fee eftpos system.However, the RBA appears to be intensifying pressure on card issuers to abandon the practice after deciding to publish quarterly data that highlight the marked differences in merchant service fees levied by the different payments networks.According to the RBA, the average total merchant service fees collected on debit card transactions routed through Visa and Mastercard systems during the September quarter was 58 basis points.While that is four bps lower than a year ago, the RBA found that debit transactions routed through the eftpos network attracted average total merchant fees of only 26 bps of the value of debit card payments.In other words, merchants derive a saving of around 60 per cent on merchant service fees when debit card payments are routed through eftpos.The RBA push to open the market for contactless payments to competitive forces now has the attention of federal politicians, who recently grilled the chief executives of the four major banks on their willingness to abandon the automatic routing practice on contactless transactions.While ANZ and NAB have both indicated they support moves to allow merchants to select the low fee network, Banking Day understands that CBA and Westpac are continuing to defend the current routing arrangements.As the largest debit card issuers in the country, CBA and Westpac each stand to lose hundreds of millions in annual fee revenue if the barriers to eftpos' participation in the contactless market are removed.The two Sydney-based majors appear to be the main sources of resistance to reform after Mastercard and Visa gave formal undertakings to the RBA in 2013 that they would not stand in the way of merchants from exercising choice in routing contactless transactions.If agreement cannot be reached with the major banks, the RBA could use its statutory powers to designate reforms.The RBA's renewed interest in reforming routing practices on contactless payments was highlighted in its submission to the Productivity Commission's inquiry into banking competition.In the submission made in September, the RBA noted that existing routing practices were undermining efficiency of the payments system."With international scheme transactions typically being more expensive for merchants, merchants report that the shift from contact to contactless transactions has resulted in a significant increase in payment costs for debit transactions," the RBA stated in the submission."Many merchants are now increasingly interested in their banks providing them with the ability to send debit transactions via the lower-cost network even if