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RBA Decides in Favour of Mobile Wallet LCR

RBA Decides in Favour of Mobile Wallet LCR

(22 September 2022 – Australia) The Reserve Bank of Australia (RBA) has back tracked on its Least Cost Routing (LCR) stance towards how banks and major schemes process transactions in mobile wallets.

The renewed position infers retailers will have an inherent choice over card acceptance. The altered view could significantly slash debit card acceptance costs of over  A$1 billion per annum (pa) for retailers and government as a result of mobile transactions no automatically routing to the product the cardholder’s bank selects by default. The RBA had previously declared LCR, which allows merchants to choose which system a debit card payment runs on, was too complex to apply to mobile wallets such as Apple Pay due of technical challenges.


After five decades of Banks determining electronic payment flows, Apple revealed it is enabling its iPhone handsets to become payment terminals in a move that could poach lucrative terminal rental deals Banks use to lock in merchant customers.


“The accumulation of additional evidence, particularly through recent liaison with stakeholders, suggests that the technical implementation of LCR for mobile-wallet transactions would be less complex and costly than first thought” the RBA said in a statement.


“Accordingly, with the ongoing rapid growth in mobile-wallet transactions, the policy case for extending LCR to such transactions has strengthened. We have asked for concrete plans and assurances from banks that have supplied old terminals to merchants which do not allow LCR that they will address gaps promptly, to ensure that LCR is made available for in-person transactions for all their merchants”

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