Least-cost routing (LCR) is a setting that lets a merchant direct a card payment through the lowest-cost network available. In Australia it mainly applies to dual-network debit cards, which carry both the domestic eftpos scheme and an international scheme such as Visa or Mastercard.
When a customer taps a dual-network card, the terminal or payment provider decides which network processes the transaction. Without LCR, contactless payments often default to the international network. With LCR enabled, the payment is routed to whichever network has the lower cost for that transaction, based on the merchant fees agreed with the provider.
Retailers and hospitality venues ask their acquirer or payment provider to switch LCR on, or choose a provider that offers it at no extra cost. Venues with many small contactless sales, such as cafes and takeaway shops, tend to see the most benefit because fees are charged on every transaction.
Check whether LCR is on by default or must be requested, whether it applies to all terminals and online payments, and whether your pricing is blended or cost-plus, since savings are easier to see on cost-plus pricing. Rules and regulator expectations on routing have been evolving, so check current Reserve Bank of Australia guidance and your provider terms.
LCR matters because card fees are a real cost on thin margins, and it does not change anything for the customer at the counter. RetailCare can help confirm that terminals and POS integrations are set up to use it.