Regulators in Australia are mulling the option of intervening to prevent domestic banks’ practice of routing debit card payments through Visa and MasterCard automatically.

According to a report by Reuters, the banks should end the duopoly and instead encourage retailers to use the local and cheaper network EFTPOS, which is controlled by domestic financial services providers and retailers.

Neither Visa nor Mastercard commented on the matter.

Reserve Bank of Australia (RBA) governor Philip Lowe was quoted by Reuters as saying: “We have made it very clear to the banking industry that we expect them to develop the functionality to allow the merchant to choose which payment rails it goes through, the international schemes or the EFTPOS schemes.

“If that process doesn’t work then we would have to consider a regulatory solution.”

At present, RBA is reviewing the payment regulations of the country to address issues including the impact of new technologies in the payments space as well as new players.

Low said that intervention in this matter would be the least preferred option as the banks had vowed to develop systems to support the cheaper alternative.

A NAB spokesman said that the bank has been allowing its merchant clients to select their payment network since April 2018.

“We continue to roll out this service across our client base throughout this year,” the spokesman was quoted as saying.

The country’s other major banking groups – Commonwealth Bank of Australia, Westpac, and ANZ, did not comment on the issue.

As per RBA estimates, debit card transactions processed via Visa or Mastercard are over double as costly for retailers compared to EFTPOS.

According to the retailers’ association, this incurs additional costs of $200m-$340m on an annual basis.