I am not surprised because:
- 20 or 30 years ago, a 2-3% merchant fee covered the cost of providing a "cashless" payment for the merchant, when cash was almost exclusively used for payment (or cheque). But nowadays, the 0.8% RBA cap - out of which banks can still pay for some amount of reward points and other card benefits and presumably still make some profit - shows that the actual cost of providing a cashless payment facility has come down significantly - economies of scale.
- In that context, merchants don't see the value in paying 2-3x for something which is pretty much par for the course
- Merchants who accept Amex are effectively paying for the higher level of rewards Amex provides, and as their expanded merchant pool drives down the merchant fee, they were losing money - and I believe Amex's Australian operations have been under some pressure?
I do wonder whether this will start to have an impact on sign-on bonuses - Amex / banks are effectively paying you in the form of big sign on bonuses, but as their margins compress and the business becomes less lucrative, will they chase it less? Particularly as other payment methods start to arise where the costs of interchange continue to come down...
A Macquarie transaction account or HSBC Everyday Global will now be used for international transactions without the extortionate foreign currency conversion fees. The rewards are not worth the cost and effort of chasing.
As someone I know in marketing who designs reward programs told me, they're designed to reward, but not the consumer who participates in them.
