Credit card perks under threat as regulators eye changes to payment rules
- Replies 11
Many people have come to rely on rewards programs that promise perks for everyday spending.
But changes are looming that could alter how these benefits work, leaving some wondering about the future.
What’s behind the shake-up, and what might it mean for consumers?
The RBA has announced a major overhaul of Australia’s card payment system, with two big changes on the way.
First, it plans to scrap card surcharges, those extra fees like the '1.5 per cent surcharge for credit card payments' that cost consumers about $1.2 billion each year.
Second, it wants to reduce interchange fees—the charges merchants pay banks whenever someone taps or swipes a card—potentially saving businesses, especially small ones, another $1.2 billion annually.
The Australian Banking Association (ABA) isn’t happy. They say that if the RBA slashes interchange fees, banks will lose out on hundreds of millions of dollars—money they currently use to fund rewards programs and keep cardholder fees down.
Simon Birmingham, the ABA’s chief executive, put it bluntly: 'There is a risk that driving [interchange fees] down further would put further pressure on household budgets through higher card fees, shorter interest-free periods and diminished rewards.'
In other words, the banks are warning that if they make less from merchants, they’ll make up for it by charging you more or giving you less in return.
The RBA isn’t buying the banks’ doom-and-gloom scenario. They point out that even with the proposed changes, interchange fees in Australia would still be higher than the actual cost to banks of running card programs.
If banks do hike fees or cut rewards, the RBA says, it’s not because they have to—it’s because they want to boost their profits.
'Some issuers may choose to increase cardholder fees or reduce benefits such as rewards points, particularly on credit cards, to boost their profitability in response to reductions in interchange settings,' the RBA wrote in its consultation paper.
Australians spend about $38 billion a month on credit cards, and a huge chunk of that is tied to rewards programs—think Qantas and Virgin frequent flyer points, supermarket loyalty schemes, and more.
In fact, Qantas estimates that more than a third of all credit card spending is on cards linked to its loyalty program, and most points are now earned on everyday purchases, not flights.
If banks act on their warnings, Australians could face higher annual credit card fees, fewer or less generous rewards points, shorter interest-free periods, and possibly more hidden fees or charges.
Not all the changes are bad news for consumers. The banks themselves support the RBA’s plan to scrap surcharges, calling the current system 'burdensome and confusing.'
If you’ve ever been stung by a surprise fee at the checkout, this could be a welcome relief.
The RBA is set to make a final decision on these changes by the end of the year. If the proposals go ahead, you can expect to see the new rules roll out in 2025.
Are you worried about losing points or paying more in fees? Have you already noticed changes to your card’s rewards or costs? Share your thoughts and experiences in the comments below.
Read more: No-cost GP clinic shuts down, leaving thousands stranded without care
But changes are looming that could alter how these benefits work, leaving some wondering about the future.
What’s behind the shake-up, and what might it mean for consumers?
The RBA has announced a major overhaul of Australia’s card payment system, with two big changes on the way.
First, it plans to scrap card surcharges, those extra fees like the '1.5 per cent surcharge for credit card payments' that cost consumers about $1.2 billion each year.
Banks warn Aussies could face higher fees, fewer rewards under proposed RBA interchange fee cuts. Credit: Pexels
Second, it wants to reduce interchange fees—the charges merchants pay banks whenever someone taps or swipes a card—potentially saving businesses, especially small ones, another $1.2 billion annually.
The Australian Banking Association (ABA) isn’t happy. They say that if the RBA slashes interchange fees, banks will lose out on hundreds of millions of dollars—money they currently use to fund rewards programs and keep cardholder fees down.
Simon Birmingham, the ABA’s chief executive, put it bluntly: 'There is a risk that driving [interchange fees] down further would put further pressure on household budgets through higher card fees, shorter interest-free periods and diminished rewards.'
In other words, the banks are warning that if they make less from merchants, they’ll make up for it by charging you more or giving you less in return.
The RBA isn’t buying the banks’ doom-and-gloom scenario. They point out that even with the proposed changes, interchange fees in Australia would still be higher than the actual cost to banks of running card programs.
If banks do hike fees or cut rewards, the RBA says, it’s not because they have to—it’s because they want to boost their profits.
'Some issuers may choose to increase cardholder fees or reduce benefits such as rewards points, particularly on credit cards, to boost their profitability in response to reductions in interchange settings,' the RBA wrote in its consultation paper.
Australians spend about $38 billion a month on credit cards, and a huge chunk of that is tied to rewards programs—think Qantas and Virgin frequent flyer points, supermarket loyalty schemes, and more.
If banks act on their warnings, Australians could face higher annual credit card fees, fewer or less generous rewards points, shorter interest-free periods, and possibly more hidden fees or charges.
Not all the changes are bad news for consumers. The banks themselves support the RBA’s plan to scrap surcharges, calling the current system 'burdensome and confusing.'
If you’ve ever been stung by a surprise fee at the checkout, this could be a welcome relief.
The RBA is set to make a final decision on these changes by the end of the year. If the proposals go ahead, you can expect to see the new rules roll out in 2025.
Read more: No-cost GP clinic shuts down, leaving thousands stranded without care
.png){kind=icon}
