The Reserve Bank of Australia will remove surcharging on debit, prepaid and credit cards on the designated EFTPOS, Mastercard and Visa card networks, while also lowering the cap on interchange fees paid by Australian businesses. The changes are expected to kick off on 1 October 2026.
While the removal of surcharges is generally good news for the public on the face of it, the overall package of changes means that reward points cards will likely drop in value.
When interchange revenue falls, the profit available to support point earn rates, sign-up bonuses and premium benefits is also reduced.
What the RBA’s decision means for you
By lowering the interchange cap to 0.3 per cent on consumer credit cards, the RBA has materially reduced interchange funding.
This is expected to prompt a significant recalibration of reward programs over time, likely with a reduction in the points earned and some benefits associated with the card. The hardest impact would most likely be felt in the points-earned-per-dollar rate or in sign-up bonuses. Annual fees may also go up.
Business cards will remain at the 0.8% interchange fee cap, so we don’t expect as much movement in that sector in terms of loyalty points and card perks.
What about American Express?
In the short term, American Express cards may become relatively more attractive in the market. Unlike Visa and Mastercard, Amex is not subject to the RBA’s interchange caps because it operates a ‘closed-loop’ system and issues its own cards.
If banks respond to lower interchange revenue by reducing point earn rates or tightening benefits on Visa and Mastercard products, American Express cards may temporarily offer comparatively stronger points earn, larger sign-up bonuses or richer benefits.
Amex’s Membership Rewards points are also flexible and can be transferred to many airline and hotel partners.
But in the long term, American Express will most likely reduce its merchant fees to remain competitive in the markets. Therefore, we could also see Amex gradually trimming benefits for its Card Members.
Say I spend 2000/month on my credit card at an average of 1.5% card surcharge. Over an annual basis I’m saving $360/year. If you’re someone who’s hitting the spend amount for the HSBC star alliance card of $50,000/yr you’re now saving $750/yr in fees. I can’t see how this is a bad thing…