LOYALTY: Will travellers pay the price for the crack down on card fees in Australia?

Australian travellers’ love affair with points-earning credit cards could be heading for turbulence, as the Reserve Bank of Australia (RBA) tightens the screws on card payment fees. On the surface, it sounds like good news: lower costs for merchants, potentially fewer surcharges at checkout, and a fairer payments system.

But as any seasoned points chaser knows, when banks lose revenue, they work to claw it back elsewhere — and that’s where travellers should start paying attention.

Changes

The RBA is reviewing, and likely reducing or eliminating, the interchange fees that banks charge retailers every time you tap, insert or swipe your card.

These fees are a key funding source for credit card rewards programs. Every time you spend, the merchant pays a fee, the bank takes a cut, and a portion of that cut helps fund the points, perks and occasional lounge invite that make premium cards attractive in the first place.

If that revenue pool shrinks, there’s less money available to fund those benefits.

Why this matters for frequent flyers

For travellers, credit cards are more than just a way to pay, they’re a key part of the frequent flyer strategy, helping unlock points, lounge access, travel insurance and, increasingly, even status credits without flying.

But these perks are not acts of generosity. They’re underpinned by a delicate commercial balance.

If interchange revenue falls, banks will respond. The most likely outcome is a quiet devaluation of earn rates, where that once-generous ‘1 point per $1’ slips to something less appealing over time. Alternatively, banks may push annual fees higher, especially on premium cards that already sit north of AU$700, or start trimming benefits such as lounge passes, travel credits or insurance inclusions.

The hidden risk: fewer premium cards

There’s also a broader structural risk that goes beyond just devaluations. Australia still enjoys a relatively strong range of rewards cards compared to markets like Europe, althouhg not as attractive as in the USA. If the RBA pushes too far, banks may decide that premium rewards cards are no longer commercially viable.

That could mean fewer sign-up bonuses, less generous earn rates and a shrinking pool of airline-linked products all of which would make it harder to rack up points without flying.

Qantas and Velocity are both shifting to earning points on the ground

Airlines like Qantas have been moving into ‘earn on the ground’ strategies, encouraging members to build points and status through everyday spending, credit cards and partner ecosystems rather than just flights.

If credit card economics weaken, that strategy takes a hit. It also chips away at one of the biggest shifts in loyalty programs in recent years, the idea that you can meaningfully progress your status without boarding a plane.

Dissapearing surcharges

In theory, lower interchange fees should lead to lower card surcharges. In practice, travellers shouldn’t expect a sudden outbreak of generosity at the checkout. Australian merchants have historically been slow to pass on savings, and surcharges often take on a life of their own regardless of underlying costs.

The risk is that travellers end up with fewer points and fewer perks, while still paying much the same in surcharges.

2PAXfly Takeout

This isn’t an overnight change, but it’s one worth watching. If the RBA follows through with meaningful cuts, the impact is likely to be gradual. Rewards programs will become less generous and therefore less attractive. Premium cards will become more expensive, and the overall value equation less for the loyal consumer.

For travellers, that means adapting. Locking in strong sign-up bonuses while they still exist makes sense, as does taking a closer look at whether high annual fees continue to deliver real value. It may also be time to diversify how points are earned, rather than relying too heavily on credit cards alone.

Don’t just hold on to the credit cards you have. Monitor as benefits change, and cancel old and/or apply for new cards, as the game changes. American Express has already signalled some less than advantagious changes to it’s Australian Platinum charge card, including reduced access to lounges, and a higher percentage currency change fee. Downgrades will come early, and any improved benefits much later, if at all.