Most debit cards issued in Australia (i.e. cards that draw funds from a bank account) are dual-network cards, i.e. support both an international network (Visa or Mastercard) and the domestic EFTPOS network. This means that debit card transactions can be routed through either of those networks.

Typically, when a dual-network card is inserted into a point-of-sale terminal, cardholders determine how the transaction will be routed by selecting either CHQ or SAV for EFTPOS or the CR button for the international network.

However, for a contactless or ‘tap-and-go’/direct debit transaction, the cardholder is not given that option and presently the transaction is usually routed to the international network for processing.

Data collected by the Reserve Bank of Australia (RBA) highlights that merchant service fees on EFTPOS cards are on average lower than fees on Visa and Mastercard debit cards.

The merchant payments landscape is undergoing a period of rapid, technology-driven change. To make payments a seamless part of the shopping experience, merchants increasingly encourage cardholders to store their payment credentials on file, powering faster checkouts, increased spend, and lower shopping cart abandonment.

Scheme Fee Tokenisation for Merchants allows merchants to convert the card information that consumers save on file into ‘tokens’ and to use this encrypted data to help secure transactions. How it works:

• When you enter your card details, they’re immediately replaced with a Mastercard token.
• The Mastercard token is unique to both you and the business you’re shopping with.
• When you then make a payment, the token is transmitted – not the card details.
• If your card details ever change, the new details are automatically mapped to the Mastercard token. This reduces preventable declined transactions and ensures continuity of your payments.

Keeps card information up to date

• Consumers are relieved of the administrative burden of manually updating each merchant where their card is stored on file (known as COF)
• Without lost and/or expired card declines slowing down the payment process, higher approval rates can be achieved, and merchants can capture greater transaction volume

Reduces the likelihood of card declines

• The tokens used in this solution provide more information and greater visibility to card issuers during payment authorisation. This means that false declines, which occur due to incongruence between the standing of a consumer’s card and the issuer’s fraud logic are reduced, making it easier for consumers to shop

Provides an enhanced customer experience

• Consumers don’t need to take any action; MDES for Merchants does the work for them to ensure that their payments go uninterrupted and become more secure
• Removing the pain points of administrative effort, rejected payments and fraud attacks, the consumer experience is frictionless, encouraging higher purchase completion rates and increased revenue

55% of consumers use card on file and yet 81% are still concerned about the protection of these details. By removing card details in the digital space and substituting in merchant-specific tokens that are encrypted, tokens can only be used with intended issuer and therefore security attacks become more difficult.

• A stolen token can’t be used at merchants without the corresponding cryptogram, so opportunity for fraud is significantly reduced
• Fraud can easily be tracked to a single token and therefore MDES for Merchants enables greater control, as tokens tainted by fraud can quickly be revoked from use
• As a result, consumers operating under a tokenised framework have peace of mind about the security of their payments and therefore are likely to spend 10 times more than digitally inactive customers, often returning up to 3 times more revenue.

Information to gather:

• Total processing amount (per annum)
• Current merchant bank
• Current direct debit provider
• Average transaction amount
• Percentage of credit cards/bank account direct debits
• Direct debit default rate
• Current direct debit statement
• Settlement speed

Call 1300 483 683

Can least-cost routing benefit my business?

• Typically yes this depends if your business is on a pricing plan that has differential pricing for EFTPOS and international network transactions. This also depends on the average transaction size (value) and whether the EFTPOS rate charged works out to a lower charge than charged by VISA and MASTERCARD.

Will every business save?

• Savings will depend on your card mix, transaction volume, transaction size, industry, and pricing plan.
• For merchants that already add a surcharge to pass on the costs, the cost saving should be passed on to the cardholder as the surcharge should be in line with the cost of acceptance for the network to which the transactions are routed.

Are there any transaction amount limits for least-cost routing?

• TBC

Will least-cost routing also affect credit card payments?

• No. In Australia, the concept of routing choice only applies to debit card transactions (and not to credit card transactions). It also only applies to dual-network cards and cards that only support one network will always be routed over that network.

Are protections against fraud and disputed transactions the same for EFTPOS, Visa and Mastercard?

• Chargeback rights are the same for EFTPOS, Visa and Mastercard debit authorised transactions. These cover the full range of losses required by the ePayments Code, such as fraud, unauthorised transactions, goods not received and equipment malfunction or processing errors.