Least-cost routing in Australia: eftpos, dual-network debit cards and how to check it

Most debit cards issued in Australia are dual-network cards: they carry eftpos and either Mastercard or Visa. When a customer taps such a card, the payment can be processed on either network. Least-cost routing (LCR), sometimes called merchant choice routing, lets your provider send those contactless debit payments through whichever network costs you less. The Reserve Bank of Australia (RBA) expects acquirers and payment providers to offer and promote LCR, but in its March 2026 conclusions it decided not to mandate it or require it to be on by default. If you take many debit payments, check that LCR is switched on and how it decides the route.

This guide belongs to the overview of merchant payment processing fees. Figures in examples are illustrative.

How a debit payment gets routed

What the RBA expects

From the RBA's Conclusions Paper (chapter on least-cost routing of debit card transactions):

• Acquirers and payment providers should keep offering and promoting LCR to merchants. Large acquirers and payment facilitators report LCR availability and take-up to the RBA every six months.
• No mandate. The Payments System Board said there was not a strong case for a formal regulatory requirement to enable LCR in person, and it did not adopt a default-on rule with merchant opt-out.
• Dynamic LCR (choosing the cheaper network transaction by transaction in real time) was not mandated; the RBA found that threshold routing captures most of the savings at much lower cost.
• Issuers. Large issuers (above 1% of debit card transaction value) are expected to keep issuing dual-network debit cards and to provision both networks in all form factors, such as cards and mobile wallets. If they do not, the RBA said it would consider consulting on a standard.
• Progress. The RBA reported that in-person LCR was enabled for about 84% of merchants by December 2025.

The RBA has also noted that LCR helped increase competition in debit and put downward pressure on scheme fees.

Threshold routing explained

Because eftpos has often charged a fixed amount per payment and the international networks a percentage, the cheaper network can depend on the sale amount. Threshold routing sends tapped debit payments above a set dollar amount to the cheaper network for that size, and leaves smaller payments on the other.

Illustrative example: suppose that, on your plan, a debit payment via eftpos costs you 9 cents, and via the international network costs 0.45% of the sale.

Here the crossover is $0.09 ÷ 0.45% = $20, so a $20 threshold routes payments of $20 or more via eftpos. Your real crossover depends on your provider's pricing for each network, so ask it to show you the numbers.

Worked saving

Illustrative: a takeaway shop has 1,500 tapped dual-network debit payments a month, averaging $25, all currently routed to the international network.

• Current cost: 1,500 × ($25 × 0.45%) = 1,500 × 11.25 cents = $168.75
• With LCR to eftpos at 9 cents: 1,500 × 9 cents = $135.00
• Saving: $33.75 a month, about $405 a year

On a flat-rate plan you may see no saving at all, because you pay the same percentage whichever network is used; the routing saving goes to the provider. LCR matters most on cost-plus or plans that price eftpos separately. See pricing models compared.

How to check your LCR set-up

1. Ask your provider whether LCR is available on your plan, whether it is on, and whether it uses a threshold or another method.
2. Look at your statement. Count eftpos versus Mastercard/Visa debit payments. If almost all tapped debit goes to the international network, LCR may be off.
3. Ask about wallets. Find out whether LCR applies to phone and watch payments on your terminals.
4. Check the effect on fees. Compare a month before and after switching LCR on, with the card fee calculator.
5. Revisit after price changes. The interchange caps changed on 1 October 2026, and networks change their scheme fees; the best threshold may move.

Things LCR does not do

• It does not apply to credit cards. The RBA noted it may consider extending LCR to credit in future, among other options, if scheme fee competition does not improve.
• It does not stop a customer from choosing a network by inserting the card and selecting an account.
• It is not a substitute for checking your margin and monthly fees.

Frequently asked questions

Will customers notice least-cost routing?

Generally no. The customer taps as normal and the payment is taken from the same account. Rewards or protections on debit cards can differ between networks, which is why some customers prefer to insert and choose.

Is eftpos always cheaper?

No. It depends on the sale size and on how your provider prices each network. Small sales can be cheaper on the international network if eftpos is priced per transaction.

Does LCR work online?

Mostly not yet. Online and in-app routing was left to the RBA's separate Review of Payments System Regulation, which began with an Issues Paper on 25 June 2026. The RBA said it intends to publish its regulatory priorities by the end of 2026 and to consult further on them by mid-2027. Check the RBA site for its progress.

Sources

• Reserve Bank of Australia — Conclusions Paper, chapter on least-cost routing of debit card transactions (March 2026)
• Australian Small Business and Family Enterprise Ombudsman — small business guidance on payment costs
• business.gov.au — payment options for businesses