Small businesses urged to research to avoid fee waste

Woman paying with a credit card.

Many of Australia’s 2.1 million small businesses are wasting hard earned revenue by not investigating the best payment service providers, nor making the most of least-cost routing, according to a specialist payment consulting firm.

Payment Consulting Network warned most small retailers, who often don’t have time to research or money to appoint specialist consultants to determine the best option, were not aware of least-cost routing or other opportunities available in the payment landscape.

The warning comes as Payments Consulting Network relaunches its unique Merchant Pricing Hub with the addition of least-cost routing information to its platform of powerful research and tools, including a comparison calculator, which have been developed by the firm over its seven years of operations.

Research Director Catherine Batch said merchants were experiencing significant margin pressure as a result of transaction fees from credit and debit card payments.

“The stress of merchant fees on businesses has been 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,” Ms Batch said.

“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 one third of the price.

Ms Batch pointed to the experiences of Tyro customers who have opted for least-cost routing.   Its reported that eligible merchants have 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 not all banks and payments service providers have enabled the service, nor enabled it in the same way,” Ms Batch said.

“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 company has produced an easy to read guide on Least Cost routing, which is available to download for free, and highlights the Reserve Bank of Australia data showing merchant service fees on eftpos cards are almost half that of fees on Visa and Mastercard debit cards (0.6% of transaction value) and a third of fees on Mastercard and Visa Credit Cards (around 0.9% of transactions).

The guide plus free access to the updated Merchant Pricing Hub is available at




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