Banks facing pressure to offer lower fees for tap-and-go card payments

Customers face higher costs because of the way banks handle tap-and-go payments, a parliamentary committee says.

Banks face pressure to offer businesses a cheaper way of accepting so-called tap-and-go payments.

A parliamentary committee report tabled on Thursday queries the fact that banks force merchants to use a more expensive international scheme, rather than eftpos, for dual network cards.

Dual network cards represent almost two-thirds of all debit cards issued in Australia, with the remainder being solely eftpos.

As of September 2017, the average total merchant fee for a debit transaction was 0.26 per cent with eftpos and 0.58 per cent with the international schemes.

"At present, banks do not allow merchants to choose the route through which tap-and-go payments are processed," the report says.

"It is likely that banks deny merchants this choice for commercial reasons."

The higher costs are "ultimately borne by customers".

The committee acknowledges ANZ's commitment to offer least-cost routing to merchants and recommends other banks follow suit.

But if the changes are not implemented by April 1 next year, the Payments Security Board should introduce standards requiring banks to allow merchants to choose which channel to route tap-and-go payments.

Consumers should retain the right to override the merchant's choice of channel.