Westpac yesterday indicated on its website that business customers were able to select their preferred platform for processing contactless debit transactions in only ten minutes.The bank yesterday launched a new "merchant choice routing" service, which allows merchants to have all of their contactless debit card payments processed through the ePal system (operated by Eftpos Australia) instead of default routing to the Visa and Mastercard networks.According to research published in the last two years by the Reserve Bank, the new service has the potential to deliver significant cost savings to Australian merchants when customers make a contactless payment using Visa and Mastercard debit cards.Several payments experts have told Banking Day that Australian merchant could be in line to save hundreds of millions on fees if least-cost routing is embedded in the contactless debit market.Westpac is the second major Australian bank to give merchants the power to choose how contactless transactions are processed after ANZ last month opened access to the ePal network for its merchant base.While Westpac is promoting merchant choice processing as a relatively simple procedure, ANZ is warning customers of potential delays accessing the service.In its terms and conditions, ANZ makes no commitment to activate a merchant's request within any timeframe."The merchant will be informed whether the request has been approved and, if it has, of the applicable timeframe to activate merchant choice routing," ANZ tells business customers in its terms and conditions."The merchant acknowledges that the activation may not be immediate."ANZ also requires its merchants to display signs near payment terminals that notify Visa and Mastercard debit card holders that contactless transactions will be processed by Eftpos.Westpac imposes no similar condition on its merchants.While ANZ has made displaying such a sign a condition of providing the service to merchants, retail industry groups such as the Australian Retailers Association insist that the Reserve Bank has indicated it is not legally necessary."It is the ARA's understanding - having had past discussions with the Reserve Bank of Australia (RBA) that the RBA does not require merchants to reveal the way consumers transactions are routed, as it makes no difference to the consumer," said ARA chief executive, Russell Zimmerman.The ARA is encouraging its members to consider routing contactless debit transactions through Eftpos."Eftpos makes significant contributions to the vitality of the Australian economy," he said."Therefore, it is imperative that transactions costs are kept low, to ensure Eftpos remains a competitive force within the payments system."Commonwealth Bank and National Australia Bank are yet to confirm when they are likely to launch rival services to ANZ and Westpac.The RBA has warned it could take regulatory action against the banks if they are unable or unwilling to off least-cost routing to their merchants.NAB has undertaken several successful trials for least-cost routing, most notably a pilot conducted last year following a request from national pharmacy chain, Chemist Warehouse.The routing issue is likely to be made a strategic priority for new NAB chief executive Phil Chronican, who has highlighted the importance of business banking to the group's future.