Least-cost routing (merchant choice routing): how to cut debit card costs
Compayr Research · · 6 min
Most debit cards in Australia carry two networks on one piece of plastic — eftpos and either Visa or Mastercard. When a customer taps, someone decides which network processes it, and the two can cost you different amounts. Least-cost routing lets that decision default to the cheaper one. After 1 October 2026, when you can no longer surcharge, it is one of the few remaining ways to lower what you pay to accept cards.
What least-cost routing is
Least-cost routing (LCR) — the card networks call it merchant choice routing (MCR) — is a setting on your payment account that sends eligible contactless debit transactions down the network that costs you less, usually the domestic eftpos network, rather than automatically using Visa or Mastercard [1].
It only applies to dual-network debit cards (a card showing both an eftpos logo and a Visa or Mastercard logo) used for contactless or online payments. It does not change credit-card costs, and it does not apply to single-network cards.
Why it matters more after October 2026
Until 1 October 2026 many merchants passed card costs to customers through a surcharge, so the routing decision was invisible to their own margin. Once surcharging on eftpos, Mastercard and Visa is banned, the cost of every tap lands on you [2]. That makes routing debit down the cheaper network a direct saving rather than something your customers were quietly covering.
Who benefits — and who may not
Routing helps most when you take a lot of debit payments and you are on interchange-plus ("cost-plus") pricing, where the network cost flows through to your bill (see flat-rate vs interchange-plus). On some flat-rate plans the provider charges the same percentage whatever the network, so routing may not change your headline rate — but it can still affect the provider's own cost, so it is always worth asking.
How to turn it on
- Ask your provider whether least-cost routing is enabled on your account. It is usually set at the account (merchant ID) level, so it applies across your terminals.
- Check your hardware supports it. Most current terminals and app-based (Tap to Pay) solutions do; older units may need a software update or a replacement.
- Ask for a savings estimate based on your own debit volume and card mix — providers are encouraged by the RBA to help you work this out [1].
- Re-check your statement a month later to confirm debit taps are routing as expected.
The bottom line
Least-cost routing will not rewrite your whole bill, but on a debit-heavy business it is a genuine, no-downside lever — and it costs nothing to ask. Combine it with a rate that is competitive for your volume and you are pulling both levers at once.
See where you stand — enter your turnover and card mix and compare the providers we track by estimated card acceptance cost. Terminal rental and hardware are shown separately. Compare now →
Browse the full in-person provider comparison, or read how we compare. Related reading: eftpos vs credit cards explains why the network a customer taps changes your cost.
Rates and provider details are indicative — always confirm current pricing and routing options directly with the provider. General information, not financial advice.
References
- [1] Reserve Bank of Australia, "Least-cost routing". https://www.rba.gov.au/payments-and-infrastructure/debit-cards/least-cost-routing.html
- [2] Reserve Bank of Australia, "Review of Merchant Card Payment Costs and Surcharging — Conclusions Paper", 31 March 2026. https://www.rba.gov.au/
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