Right now, the Reserve Bank is working through its largest revamp of card payment rules in years, with final details expected around March and changes likely to roll out from July. It all stems from long running concerns that fees on electronic payments are too high and too confusing for consumers and businesses. Over the past decade, card rewards have become a sort of unofficial currency for travellers and big spenders, helped along by aggressive marketing from banks and airlines. Any move that alters how those rewards are funded is going to feel very real for millions of cardholders.
The headline proposal is to outlaw the extra fee many merchants tack on when you tap a debit or credit card, which sounds like a straightforward win for shoppers but removes a lever businesses use to offset what they pay to accept cards. Behind the scenes, those costs include a merchant service fee to the terminal provider and an interchange fee shared between the bank that issues the card and the payment network. Tougher limits on that interchange slice could really squeeze reward programs. When similar caps were introduced in 2017, banks responded quickly by cutting earn rates, in some cases by roughly 50%, and adding monthly caps. For example, the first $3,000 a month earned full points and everything after that earned far less, because funding points means paying airlines and partners real money.
If the Reserve Bank pushes ahead with a strict version of the rules, it looks likely that banks will once again trim sign up bonuses, reduce everyday earn rates and quietly prune extras such as lounge passes or travel credits. Card issuers that operate their own networks and sit outside the Reserve Bank’s interchange rules may stand out even more for generous introductory offers. In the meantime, big welcome bonuses remain in play, often split over two years. Offers in the 130,000 to 150,000 point range are still common for premium cards tied to major airline programs. Some savvy cardholders continue to rotate cards every 12 to 18 months to collect these deals while needing to watch their overall credit limits, annual fees and any impact on credit scores. For now, using points for premium cabin upgrades and high demand events still seems to deliver the best value, but how sustainable that strategy is will depend on where the Reserve Bank lands with its final reforms.
