The Reserve Bank has been telling merchant acquirers for some time that it wants them to make least cost routing available to merchants taking contactless card payments. Everyone got the memo but NAB.
The RBA released data yesterday showing which merchant acquirers are making least cost routing available to merchants for contactless card payments.
The data, compiled in December, show Square, Suncorp Bank, Tyro, Westpac, Fiserv and Adyen making LCR available to 100 per cent of their merchants.
ANZ Worldline has 89 per cent merchant availability, Commonwealth Bank 89 per cent and NAB 55 per cent.
Reserve Bank head of payments Ellis Connolly said the gaps in availability were mainly due to providers needing to upgrade old terminals.
Speaking at the AFR Banking Summit, Connolly said: “These providers have assured us that this will be completed over the next year.”
LCR relies on the issuance of dual network debit cards, allowing point of sale transactions to be routed through the eftpos network or Visa or Mastercard. The majority of debit cards issued in Australia are dual network.
When a consumer taps a debit card, if LCR is not enabled the transaction defaults to the global card schemes, which in most cases charge higher fees than eftpos.
The RBA is concerned that with the growth of contactless payments a shift to the higher-cost international schemes for debit payment processing is one factor adding cost to the payment system. It is keen to get costs down.
The RBA data released yesterday also show the take-up of LCR by merchants, for each acquirer. Again, NAB comes a distant last with only 14 per cent of its merchants (where debit cards are presented) on plans with LCR enabled.
Square is on top with 100 per cent, Suncorp 58 per cent, Tyro 56 per cent, CBA 42 per cent, Westpac 30 per cent, Fiserv 27 per cent, ANZ Worldline 23 per cent and Ayden 17 per cent.
Connolly said: “Merchant groups have consistently highlighted that LCR is not easily accessible in practice. The report highlights that some providers have been much more successful than others in moving their merchants across to plans with LCR.
“Providers that have yet to enable LCR for all their merchants should proactively encourage them to take it up.”
The RBA has also told providers they must make LCR available to merchants for online transactions. Connolly said the industry is not meeting the RBA’s timeline.
He said the final frontier is LCR for mobile wallet transactions. The RBA is targeting availability by the end of 2024.