Eftpos aims to be big winner from ‘least cost routing’
(24 October 2019 – Australia) Following the Reserve Banks announcement that major banks should be notifying their merchants about their right to send payments down the lowest cost rails, Eftpos is gearing up to take volume off Visa, Mastercard, NPP and buy now, pay later operators.
The central bank wants banks to promote to merchants their right to choose “least-cost routing” when accepting card payments. This could drive volume to Eftpos given its average merchant fee is 0.26 percent of the transaction value, compared to 0.58 percent for Visa and Mastercard.
“Merchant awareness of [least-cost routing] is an important factor affecting the degree of downward pressure on payment costs in the economy,” the Reserve Bank said last week.
Eftpos is also looking to lift its engagement with fintechs to help foster new competitors against Afterpay and Zip. It has started building APIs to allow outside developers to connect to its 40 million bank accounts from early 2020.
“The market is seeing a sharp increase in the pace of innovation, and the new strategy reflects a realisation that to continue to remain relevant, Eftpos needs to enhance its card capabilities in digital, mobile and e-commerce," said Eftpos' chief information officer Ben Tabell, who recently joined from HSBC. "We think a large part of this will be through building connections via APIs."