Frequent fliers will no longer have access to the same benefits and perks that credit cards currently offer. Interchange fees are going to be capped and this is what it will mean for you:
- Currently, every customer making purchases with a credit card does not pay any interchange fees. These are paid for by retailers to the issuing bank as a fee for the services provided with electronic payments.
- New RBA regulation however, is intending to ignore the many benefits interchange fees provide like security, guaranteed payment, fraud protection and speed of service by imposing a one-size-fits-all cap on the fee.
- The RBA argues that this is good legislation because it will reduce transaction costs for retailers and therefore, prices for consumers. However, extensive research shows that this is not the case and costs for consumers post-regulation remain the same.
- Instead, as we've seen elsewhere throughout Europe and the United States, interchange fee regulation will have no tangible or direct benefits for customers. Banks faced with high legislative costs will cut their losses by reducing benefits for customers.
- This has financial implications for everyone with a credit card, particularly for frequent fliers who make the most out of the benefits that credit card services currently provide.
- Frequent flyers are now faced with a range of reductions including:
- Higher annual fees
- Lower bank points
- Lower earn rates
- Increased airline fares
- The end of the American Express companion card
This is a lose-lose scenario for Australian customers, so here's what you can do to fix it. Sign this petition to tell Canberra to save our rewards!