Least Cost Routing (LCR), also known as Merchant Choice Routing (MCR), is one of the simplest ways Australian businesses can reduce their payment processing costs. It is available on most modern EFTPOS terminals, yet many merchants either do not know about it or have not enabled it. Here is how it works and how to turn it on.
How Card Payments Are Routed
Most Australian debit cards carry two networks: the domestic eftpos network and an international network (Visa or Mastercard). When a customer taps their debit card at your terminal, the transaction can be processed through either network. The cost to you (the merchant) is different depending on which network is used. Domestic eftpos transactions are typically cheaper for merchants because the interchange fees are lower. Visa and Mastercard debit transactions often cost more because their interchange fees are higher.
What Is Least Cost Routing?
Least Cost Routing automatically directs contactless debit card transactions through the cheapest available network — usually domestic eftpos rather than Visa or Mastercard. Instead of the transaction defaulting to whichever network the card issuer or terminal manufacturer has set as the priority, LCR chooses the route that costs you (the merchant) less.
How Much Can You Save?
According to the RBA, merchants who enable Least Cost Routing save nearly 20 per cent on debit transaction fees. For a business processing $10,000 per month in debit card payments, that could mean savings of $200-$400 per year. The exact savings depend on your card mix, transaction volume, and current pricing structure.
How to Enable LCR
Contact your payment provider and ask them to enable Least Cost Routing or Merchant Choice Routing on your terminal. BuzzPay supports LCR — call 1300 289 972 and our team will configure it for you. Most providers can enable it remotely without any terminal hardware changes.
Does It Affect My Customers?
No. The customer experience is identical regardless of which network processes the transaction. The payment is still contactless, still instant, and the customer does not see any difference. The only change is which network handles the transaction behind the scenes — and the lower fee you pay as a result.
