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.
