Achi news desk-
The impact of Least Cost Routing on merchant payment costsAn article by Boston Bear and Benjamin Watson and published by the RBA is a valuable read for retailers interested in the cost of cashless payments.
The conclusion shows the value of lowest cost routing.
This article presents new estimates of the potential cost savings for dealers from running LCR. We estimate that, on average, LCR is associated with a nearly 20% lower cost of acquisition for debit card transactions, with the potential cost savings greatest for small merchants and those in plans that bundle prices for different card types. The results presented mainly capture the savings from LCR for in-person transactions using physical cards, given the limited availability of LCR for online and mobile wallet payments. As the LCR becomes more available for these types of transactions, the potential savings should be higher given that they make up a significant and growing share of debit card payments.
Many newsagents had access to and benefited from low cost routing years ago. There is an even better (lower cost) option now with a cost plus model.
At a minimum, newsagents should be on the lowest cost routing model. If you are not on this model or cost plus, you are probably paying more than you should. And if you charge extra and think it’s not your problem, customers will notice the cost of extra.
