Now that Least Cost Routing has to be offered to retail customers, automating that tap-and-go payments are processed through the cheapest option of eftpos, debit, or credit, on each individual transaction, every retailer should be taking up the option to save money on payment processing.
All it takes is a phone call or contact with your bank, or payment processing provider, to request Least Cost Routing be setup with your business.
However, Payments Consulting Network managing director, Mangala Martinus tells RetailBiz that too many retail businesses are yet to sign up for Least Cost Routing, and that it should be offered automatically.
Martinus says, “The RBA is a reluctant legislator. They prefer to let market forces do the job.
“There would be hundreds of thousands of small businesses and businesses that could benefit, that haven’t had it enabled yet.”
Martinus’ business offers a payment pricing comparison tool, through Merchant Pricing Hub, and he says the clients that have used the tool have achieved between 15%-40% savings on their payment processing costs.
In the world of payment processing, it’s complicated for retailers to make simple comparisons between different payment processing systems, and banks.
Between eftpos, debit or credit rates, flat fee versus percentages, how your business size can bring down the costs, and the general card mix of your customers, there’s a huge number of factors that come into play.
It’s still usually simpler to stay with your existing provider, Martinus points out, with the effort involved in moving from one to another forgoing the money the business would have saved.
“If you can get a 10% saving by calling a bank and asking to switch on Least Cost Routing, that’s the easy option.
“Occasionally banks will try to match prices, but they tend to do that for bigger clients, a larger volume of business that they don’t want to lose.
“A lot of small businesses we deal with, come to us because they’ve tried with their bank. They’re not happy, but they couldn’t get better prices.”
Mangala wants the RBA to legislate Least Cost Routing as standard for all payments.
“We can help 1,000 businesses over the next two years, but if the RBA makes the change, they can affect hundreds of thousands of small businesses.
“After a lot of organisations have been affected by covid, saving a couple of thousands of dollars in fees is pretty important,” Mangala says.