Is the RBA coming for your Qantas Points? Here’s what’s happening
The RBA's proposed changes to card payments and interchange fees will save customers money but make points programs more expensive.
Good news! The RBA wants to remove surcharges on debit and credit cards.
Bad news? Well none. Unless you're a points collector.
Because the Reserve Bank's proposed changes would also cut interchange fees, which merchants pay to payment service providers when a buyer uses a card.
Banks charge higher interchange fees on credit cards that offer frequent flyer or rewards points.
These programs cost banks and card providers, and they recoup these costs (and more) via interchange fees and card annual fees.
That's why a credit card that earns you Qantas Points on your spending comes with a $400 annual fee, while a low rate card might only charge $55.
So lower interchange fees inevitably mean higher card fees for customers.
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Australians love collecting Qantas Points, Velocity Points, Flybuys, Everyday Rewards and bank rewards points.
Finder research shows that 35% of Australians collect Qantas Points, followed by Velocity Points at 29% and CommBank Awards Points at 12%.
Everyday Rewards Points are far more popular (66%) as are Flybuys (63%). But these points programs are run by the big supermarkets and aren't affected by the RBA's proposed changes (although both points programs connect to other rewards programs).
The future of credit card points
"We've seen the number of points needed for many Qantas redemptions increase this year, so points are not quite as valuable as they were," said Finder's frequent flyer expert Angus Kidman.
"That doesn't mean they're worthless, but it highlights that getting the most from points requires planning and effort."
On 15 December Amex Membership Rewards Points transfer rates to some airline points programs will also change, with conversion rates increasing from 2:1 to 3:1.
The banks are in favour of some of the RBA's proposed changes.
"Banks therefore fully support the government and the RBA's intent to ban card surcharging and the certainty it will provide to consumers," said Australian Banking Association CEO Simon Birmingham.
But he added that lowering interchange fees "would put further pressure on household budgets through higher card fees, shorter interest-free periods and diminished rewards."
"While there's lots of speculation over the impact new fee rules might have, there haven't been any changes yet," said Kidman. "Cards with a decent bonus points offer can still offer you good value right now, provided you use them intelligently."
"Pay off your card in full each month and don't spend your points on lower-value rewards such as shopping - flights remain the best-value use of your points."
Sources
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There are so many lies or exaggerations around Surcharging. If the RBA does away with surcharging, that means the small business owner once again is paying for the customers transaction. Price will go up as a result (adding to inflation) and because the cost to business goes up there will be inevitable job losses. The big banks are behind doing away with surcharging because they are losing market share. The banks are actively trying to stop people using cash by removing access to bank branches and ATMs. Even when we are standing at the Teller they want to know why someone would want cash. Surcharging rates have dropped in the last 5 to 6 years between 0.5% to 1%. There has always been an attitude that the small business owner should just absorb the cost. This is such an unfair view, small business already has massive overheads, electricity is now a major headache which has been made worse by bad government policy.