Westpac Group has decided to reduce the tap-and-go transaction fees at the bank-owned point-of-sale (POS) terminals for small business customers in Australia.
The bank said it will process contactless debit card payments over the eftpos network, which is believed to be cheaper.
The bank has urged merchant customers to activate Merchant Choice Routing (MCR) or ‘least-cost routing’ in order to switch debit card transactions from Visa and Mastercard networks to the eftpos network.
According to the Reserve Bank of Australia (RBA), the country’s central bank, eftpos will cost 0.3% of the transaction value as against 0.5% for payments over Visa and Mastercard networks.
Westpac business division CEO Guil Lima said: “Westpac’s decision today will help merchant customers with Westpac-owned terminals activate pricing that’s best for them, giving them one less thing to worry about at an already very challenging time.
“We estimate close to 37,000 small businesses will be better off.”
However, MCR does not always result in lower payment costs for the merchants, the bank said.
Lima added: “Savings depend on many variables including the card mix, transaction volume and size, industry, and pricing plan.
“Every business will be different, for some customers, it might mean savings of less than $100 per annum while others may save upwards of $1000.”
Westpac will begin switching merchant customers to the eftpos network unless they choose not to.
The move was welcomed by Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.
Carnell said: “Westpac is doing the right thing by Australian small businesses in this economic crisis in delivering least cost routing.
“I congratulate Westpac for their industry leadership and urge other big banks to follow.”