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Unlock Savings: the benefits of Dynamic Least Cost Routing

Updated: Oct 18, 2023

Least-cost routing (LCR), also known as merchant-choice routing, offers significant advantages to businesses seeking to reduce costs across their online payment channels. This initiative empowers merchants to determine how their debit card transactions are processed, allowing them to choose the most cost-effective option available, whether through eftpos or one of the other debit networks (Visa Debit or Debit Mastercard). See the full definition of Least Cost Routing here.


A recent study by the RBA noted that debit cards accounted for 58% per cent of the total value of card payments in Australia in 2021. Most of the domestic debit cards are dual-network debit cards. This presents great opportunities for merchant to gain great benefits from Least Cost Routing.

Moreover, Least Cost Routing introduces a healthy competitive dynamic among debit schemes. With merchants being able to selectively route transactions to the lowest-cost network, debit schemes face increased pressure to lower their fees, including interchange fees and scheme fees. This competitive environment fosters a more cost-effective landscape, resulting in additional savings for businesses. By actively embracing LCR, businesses can benefit from these fee reductions and further enhance their cost savings.


Apart from saving business significant costs, Least Cost Routing when combined with more advanced digital payment capabilities can also help with improving your customer service levels, while facilitating digital adoption & acceleration across your business.


Improved customer service

The savings derived from Least Cost Routing can be transferred to customers in the form of competitive pricing or improved service offerings, making businesses more appealing to prospective customers thereby enhancing their market position, especially in highly competitive industries.

Facilitate Digital Adoption & Acceleration across your business:

More advanced payment platforms which have Least Cost Routing and smart switching capabilities, tend to offer a range of ancillary benefits, such as:

  • Multi bank connectivity & strategic bank independence

  • Enhanced service levels, responsiveness and flexibility

  • Big data capabilities which improve end to end service delivery and customer experiences

Further reducing costs with online Dynamic Least Cost Routing

Businesses can unlock even greater cost savings by implementing online dynamic Least Cost Routing. With this approach, every single transaction is actively evaluated in real-time to determine the best path that is most likely to process successfully for the least cost. This results in immediate savings to your business.

Howeer, in order to benefit from dynamic least cost routing, businesses need to have access to advanced digital payment capabilities similar to the IPSI platform and its LCR-enabled acquiring. However, the advantages of implementing an advanced digital payment platform extend beyond cost savings, as businesses also benefit from enhanced accessibility across multiple payment options, including online, mobile, and the call center. This expanded scope of dynamic least-cost routing opens the door to further cost savings.


IPSI's Least Cost Routing service is built on a dynamic rules-based module that can be customized to optimize savings for each unique business. Furthermore, IPSI capabilities are backed by our commitment to delivering exceptional service levels and providing a reliable service guarantee.


A member of the IPSI team can assess what savings from dynamic least cost routing would look like for your business based on your specific business requirements and throughput. Contact us at [email protected] or call 1300 975 630 to discuss how we can help you unlock significant savings for your business.

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