Lower Bank interchange fees to 'enhance' credit card earn rates

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Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Bingo. But if you wanted to only pay cash, there are very few circumstances where you could not, in some form or another.

IKEA once refused to take cash from me a few years ago. I was gobsmacked!
 
I read the RBA Q&A and parts of the consultation paper. From that I suggested things that might happen.

1. The growth in the use of credit cards over 10 years has seen extraordinary extra profits being made. Where the mix of transactions were cash:cheque:credit card:BPay, cheques hardly exist, cash is less used, BPay can now be done via credit card...
2. Strategic merchants have been paying around the proposed capped rate for a long time. So the vast volume of transactions aren't going to see a reduced take. The vast majority of small businesses that accept cards are charged premium rates so it's this lot who will see a reduction in their interchange rate. The question becomes what's the mix of transactions that will be affected
3. Qantas Charging flat fees will no longer be able to do so. That said $7 on a $1000 domestic airfare is only 0.7%, and $30 on an international airfare of $7000 is even less.....
4. This measure removes the cross subsidy of the small value high cost transactions and shifts the cost burden to those who have been received a cost holiday.

given what's in play, while there is likely that there might be a reduced overall take, the effect of the ups and downs might not be anything like the Armageddon that has been touted for reward schemes.
what it's likely to mean is increased transaction cost on those lovely high-value Qantas fares, a soft reduction in the earning rates countered potentially by increases in annual fees. Now when lots of the banks already have offshore call centres paid at $3 per hour instead of the Australian wage cost, a reduction in profit to the shareholders is the other option, unlikely but note the recent media advice eg from the new head of ANZ that dividends are likely to fall.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Do you guys think the earn rate on the Qantas Cash card (currently 0.5 points /$) will be affected? Is it classed as a debit card? If so the RBA website states that "the Bank is proposing to reduce the weighted-average benchmark for debit cards from 12 cents to 8 cents ... and no debit interchange fee will be able to exceed 15 cents if levied as a fixed amount or 0.20 per cent if levied as a percentage amount."
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Do you guys think the earn rate on the Qantas Cash card (currently 0.5 points /$) will be affected? Is it classed as a debit card? If so the RBA website states that "the Bank is proposing to reduce the weighted-average benchmark for debit cards from 12 cents to 8 cents ... and no debit interchange fee will be able to exceed 15 cents if levied as a fixed amount or 0.20 per cent if levied as a percentage amount."

It's actually a MasterCard Prepaid product, not a debit card.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

It's still a debit card product and will fall under the regulations - but it'll probably come to the max 20 basis points.

As for the earn rate - probably at least for domestic transactions.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

If they really want to cap something, how about capping (cc) interest rates at say + 5% above the OCR ? The rape and pillage of lower income earners with obscene interest rates is vile and immoral. To top it all off, since the OCR remained unchanged, the hot rumour is the banks will increase mortgage rates regardless.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

To top it all off, since the OCR remained unchanged, the hot rumour is the banks will increase mortgage rates regardless.

And probably cut interest rates too, which they have done on numerous occasions when there has been no change by the RBA.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

The industry consultation period has now closed for the RBA Review. It will be very interesting to see what's been said by the Banks/MasterCard/Visa/Amex in relation to the regulation. This week is when they are meant to be posted. I'm going to have a read and see what they say.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Banks, Amex say card changes will cut competition

All of the major culprits of gouging the current system are having a whinge.

Would anybody use AMEX if their reward point system was the same as an equivalent MC or Visa?

Not paired ones. The banks give all the benefits to the dual card customers (insurances, etc).

Proprietary amexes a different story.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Hey so i just got an email from The Points Team. They have released a new article which outlines some of the views from American Express and the Banks about the regulation and the impact that it will have. It's pretty telling.

I created a new thread in General Credit Card discussion as it might be more relevant there? Anyone what do you all think about it?

The article is here.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Qantas also said; and what happens if I shift my merchant account from an Australian bank to an overseas location. ? How will u surcharge then ? The whole bunkum about merchants charging more - no they are capped. They net more. It's the banks who lose profit unless they are already in super profit land. It's just spread across more credit cards. Remember there was a time when no one had a credit card. And quite rightly the rewards program are now to be funded by the wealthy rather than the poor. The poor by the way we're only paying a % just inside the new cap so they won't be 'paying more"
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Do you guys think the earn rate on the Qantas Cash card (currently 0.5 points /$) will be affected? Is it classed as a debit card? If so the RBA website states that "the Bank is proposing to reduce the weighted-average benchmark for debit cards from 12 cents to 8 cents ... and no debit interchange fee will be able to exceed 15 cents if levied as a fixed amount or 0.20 per cent if levied as a percentage amount."

Just checked the RBA discussion paper. It appeara their preferred option is to regulate prepaid cards the same as debit cards. If this happens, it sounds like the QC earn rate will come down drastically, would you agree?
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

According to the regulation notes, Prepaid will be regulated the same way as Debit, so yes all things being equal you can expect the Points earn on the Qantas Cash card to come down. Although Qantas may somehow figure out a way to lower the cost of Points for the benefit of the Qantas Card product but maintain the cost for the others issuers.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Whoa! I've been following the news lately and we've seen some pretty drastic changes on rewards programs. So glad I signed up for my amex when i did
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Qantas also said; and what happens if I shift my merchant account from an Australian bank to an overseas location. ? How will u surcharge then ? The whole bunkum about merchants charging more - no they are capped. They net more. It's the banks who lose profit unless they are already in super profit land. It's just spread across more credit cards. Remember there was a time when no one had a credit card. And quite rightly the rewards program are now to be funded by the wealthy rather than the poor. The poor by the way we're only paying a % just inside the new cap so they won't be 'paying more"

The poor fund points for the wealthy? What an absurd notion. Big spenders pay for their own points by spending more and incurring a larger amount of interchange fees. The poor, by definition, spend less so generate less profit for the credit card issuers.

I'm sick of all the socialist tall poppy anti-logic that constantly pollutes debate in this country.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Wow i've been reading up about rewards.

The banks have really dropped all of their rewards earn rates.

it's looking quite depressing now
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Yes, and the RBA Payments System Board meets on Friday 20 May, when it's likely to decide on final interchange reforms. There are more announcements from banks still to come.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

If there are still bonus points offers for signing up to cards (+ doing minimum spend) these changes could lead to more trying to increase the number of cards churned a year in order to get the desired number of points. Could also mean that more use bid now upgrades due to insufficient points to simply use points.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

I guess there's always a chance QF will drop the cost of points.

(lol)
 
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