Meet Mia: A Small Business Owner Who’s Unknowingly Paying More
Mia, the proud owner of a small online ceramics shop, has always assumed that every transaction her customers make follows the same process. However, what she doesn’t know is that every time a customer checks out using a dual-network debit card, her business could be incurring higher transaction fees than necessary. The reason? While Mia’s payment processor may be routing her customers’ payments through international networks like Visa or Mastercard, there’s actually a cheaper, more efficient option available: the Australian EFTPOS network.
What Are Dual-Network Debit Cards?
To understand the issue, let’s rewind to the 1980s. Australia decided to create its own payment system to reduce reliance on foreign networks and make debit transactions quicker, cheaper, and more secure. This gave birth to EFTPOS (Electronic Funds Transfer at Point of Sale), a homegrown solution owned by Australian banks and retailers, designed to make everyday payments – whether at your local corner store or major supermarket – affordable and efficient.
Fast-forward to today, according to the Reserve Bank of Australia, 90% of Australian debit cards are dual-network cards, meaning they feature both EFTPOS and Visa/Mastercard logos. These cards offer merchants like Mia the opportunity to route transactions through EFTPOS, which can be 45% cheaper compared to Visa and Mastercard. However, here’s the kicker: by default, most payments on these cards automatically route through the more expensive international networks unless the merchant takes proactive action.
Benefits of using LCR with Paydock?Â
Paydock’s optimised Least-Cost Routing (LCR) solution simplifies payment processing, allowing merchants to reduce costs and increase efficiency. Here’s how it benefits merchants:
- Cost Savings: LCR enables merchants to route transactions through the most cost-effective network, significantly reducing interchange and network fees. By using domestic networks rather than international ones, merchants can save on high transaction costs.
- Increased Profit Margins: With lower transaction fees, businesses see a direct boost in profitability. The money saved on processing costs can be allocated to other areas of the business, helping to improve overall financial performance.
- Enhanced Customer Experience: By cutting down on transaction costs, merchants can invest the savings into improving customer-focused initiatives. This could include better loyalty programs, more competitive pricing, or enhanced services – ultimately driving higher customer satisfaction and loyalty.
With just a few clicks in the Paydock platform, merchants can easily enable LCR and start seeing immediate cost benefits, making payment processing smarter and more efficient.
How to enable LCR with Paydock?
Merchants can enable Least-Cost Routing (LCR) through the Paydock dashboard quickly and effortlessly, with just a few simple clicks. To begin, they’ll need to register with EFTPOS and obtain their credentials. Once the credentials are available, merchants can activate EFTPOS within the Paydock platform.
The setup is straightforward and user-friendly – merchants can create routing rules such as: “If the card is a multi-network debit card, route the transaction through EFTPOS; otherwise, send it to the default gateway, such as MPGS.” This rule-based approach allows for seamless optimisation without the need for complex technical work or deep integrations.
Beyond basic routing, the platform also supports more advanced conditions. For example, a merchant may choose to route transactions over a certain threshold – say, AUD 100 – through EFTPOS to take advantage of lower fees, while directing smaller payments through their primary processor. Paydock performs all the necessary checks to ensure transactions are processed in line with the configured logic.
Merchants also benefit from comprehensive reporting capabilities. The Paydock platform provides clear visibility into how transactions are routed, including filters to view those specifically processed through EFTPOS. This allows businesses to generate detailed reports for reconciliation or further analysis – all from a single dashboard.
For more information on how to integrate LCR on Paydock and other products offered by Paydock, please contact us.
Author: Maryna Rybalko
