Aussie merchants get ahead by understanding the cost of taking payments

BY Australian Retailers Association
03 February 2020

With as many as 2.1 million Aussie merchants wasting hard-earned revenue by not investigating the best payment service providers, the time is right for a change.

As more merchants start to understand that by saving a dollar here and there, they can drastically improve their bottom line, there has been a recent interest in least-cost routing.

As the name suggests – least-cost routing ensures the transaction is processed via the lowest cost network and is being offered by both challenger and leading Australian banks.

Despite this, most small businesses are not making the most out of least-cost routing.

Often small businesses don’t have the time to research nor the money to appoint specialist consultants to determine the best option and are not aware of least-cost routing or other opportunities available in the payment landscape.

With merchants experiencing significant margin pressure as a result of transaction fees from credit and debit card payments, it is timely to investigate the options.

Avoid waste in merchant fees

The stress of merchant fees on businesses has been recently exacerbated by the rise of contactless or ‘tap-and-go’ transaction payment solutions, as presently, the transaction is routed through international networks even if the card used is also attached to the domestic eftpos network.

Unless the merchant has opted for least-cost routing, where a card transaction is automatically routed to the lowest cost network of the networks attached to it, they could be paying close to double or more than they should on transactions.

Take for example the average $50 transaction. If the Visa and Mastercard merchant service fee is 1 per cent and the eftpos merchant service fee is 15 cents per transaction, all eligible transactions routed to Visa and Mastercard would be $0.50, while if routed through eftpos the fee would be about, of the price.

For instance, Tyro reported that customers that opted for least-cost routing saved on average over 8 percent on total merchant service fees since the functionality became available with some achieving savings of 20-30 per cent on routed transactions.

Least-cost routing functionality has the potential to help merchants experience savings of this size and scale, but so far, one-third not all banks and payments service providers have enabled the service nor enabled it in the same way.

Feeling a little confused?

Don’t worry, Merchant Pricing Hub has done all the homework, providing an explanation on the products available for merchant payments, the benefits of each, considerations and where least-cost routing is available so Australian businesses can start saving sooner rather than later.

The guide plus a discount code for free access to the updated Merchant Pricing Hub is available at

Article by Merchant Pricing Hub

Merchant Pricing Hub is Australia’s first independent website dedicated to helping merchants find the best in-store or online payments service provider for their business. For more information visit:

Mangala Martinus

M: +61 418 11 6802 | T: +61 2 8069 2630

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Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $320 billion sector, which employs more than 1.3 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating, and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit or call 1300 368 041.

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