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

The RBA Payments System Board met today and has reached a decision on new card payments regulations. This will be published in the next week, as per today's media release:

"Review of Card Payments Regulation. The Board discussed in detail the competition and efficiency issues involved in the Review that was initiated in March 2015. The Board discussed submissions made by stakeholders and was briefed on the extensive consultation process undertaken by the staff. The Board made a number of decisions in relation to the Review and approved the publication of a Conclusions Paper and Final Standards to reflect these decisions. The Bank expects to publish this material within the next week."
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Fingers crossed its no worse than we expect.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Thanks for posting.

It's frustrating that banks were cutting reward rates before this was even passed.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

I am happy to have my points earn cut as long as there is serious legislation cutting credit card surcharges as well (preferably banning them).

Merchants cannot have their cake (lower banking costs) and eat it too (unjustifiable CC surcharges). The maximum CC surcharge should be 0.5% under the proposed changes.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Pleb Status said:
I am happy to have my points earn cut as long as there is serious legislation cutting credit card surcharges as well (preferably banning them).

Merchants cannot have their cake (lower banking costs) and eat it too (unjustifiable CC surcharges). The maximum CC surcharge should be 0.5% under the proposed changes.
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The laws have already passed requiring merchants to cap credit card surcharges to what it actually costs them. I believe these laws come into effect on 1 July.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Doctore1003 said:
The laws have already passed requiring merchants to cap credit card surcharges to what it actually costs them. I believe these laws come into effect on 1 July.
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I do not believe this will do much to the rampant overchargers (airlines, hotels etc). Merchants calculating their own 'costs' of acceptance will not work. If CC surcharges are allowed, fixed caps are required, similar to that being proposed for the merchant fees charged by the banks.

I will be happy to be proven wrong, however on 2 July we will be paying very similar CC surcharges to what we are paying now (fixed surcharges will be changed however) and earning less points.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Pleb Status said:
.... If CC surcharges are allowed, fixed caps are required, similar to that being proposed for the merchant fees charged by the banks. .....
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I agree, "self regulation" or "self pricing" never works out well for the consumer - it always works out well for the self regulator though. Now I wonder why that might be....
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Just be done with it and say no surcharges allowed!
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

The RBA had made its final announcement on interchange fees (as well as surcharges). Here is the media release Review of Card Payments Regulation: Conclusions | Media Releases | RBA and Q&A About Card Payments Regulation – Questions & Answers | RBA

Seems to be largely in line with what we were expecting.

Key points:
- The weighted-average benchmark for credit cards will remain at 0.50 per cent
- The weighted-average benchmark for debit cards will be lowered from 12 cents to 8 cents
- No credit card interchange fee will be permitted to exceed 0.80 per cent 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
- American Express companion cards will be subject to the same interchange fee regulation
- Transactions on prepaid cards will be included with debit cards in the observance of the debit benchmark (I think this spells bad news for Qantas Cash and Velocity travel cards)
- Amex, Diners and other proprietary cards continue to be excluded (good news)

The new interchange benchmarks will take effect from 1 July 2017.
 
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Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Doctore1003 said:
- American Express companion cards (issued by the banks) will be subject to the same interchange fee regulation
- Amex, Diners and other proprietary cards continue to be excluded (good news)
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This will be a boon for Amex direct issued cards & may see the banks move away from issuing companion Amex cards altogether.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Doctore1003 said:
The new interchange benchmarks will take effect from 1 July 2017.
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Why on earth does it need to take over a year to be implemented? It's just another 12 months to allow banks and retailers to pull it out of customers.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Mr_Orange said:
Why on earth does it need to take over a year to be implemented? It's just another 12 months to allow banks and retailers to pull it out of customers.
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Especially since reward points have already dropped.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Hopefully there will be no more changes to the reward schemes that were recently amended, given the new RBA regs have been flagged for some months.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

opusman said:
Especially since reward points have already dropped.
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Yes indeed, so for the next 12 months the banks are making money at both ends.

Perhaps we should call up or write to our credit card providers and insist they reinstate the old earn levels until 1 July 2017.
 
Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Mr_Orange said:
Yes indeed, so for the next 12 months the banks are making money at both ends.

Perhaps we should call up or write to our credit card providers and insist they reinstate the old earn levels until 1 July 2017.
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Excellent idea. Key thing would be to look at the notices issued saying that they are decreasing points earn. If they have made any statement that it is due to RBA regulations or legal changes, then there is grounds for legal action.

For example BankWest claim that the change is due to November 2015 legislative changes - as far as I recall that cannot be right?

Media Release : Notice of Change to the “Bankwest Qantas MasterCard<sup>®</sup> and More MasterCard credit cardsâ€

[h=3]Why are we making this change?[/h]Legislative changes made in November 2015 has reduced the income received from merchants that directly subsidise the cost of reward points. This change means we can continue to reward our customers without needing to make other changes to our products at this stage.
Bankwest endeavours to provide market competitive credit card products, which we'll continue to review to ensure we deliver compelling value propositions to our customers.
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Re: Interchange regulation will lower Visa and MasterCard Points Earn in 2016

Speaks volumes :D
 
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