Australia's credit card market is beginning to show the first effects of new banking rules instituted by the Reserve Bank of Australia earlier this year.
Sydney, Australia-based Qantas Airlines this month began imposing a 1% surcharge on credit card transactions. Qantas decided to surcharge after the central bank began allowing credit card surcharges in January. The RBA plans to impose interchange cuts averaging 40% in October.
Credit card merchant fees "were a significant and increasing cost to Qantas," John Borghetti, Qantas executive general manager of sales and marketing, said in a prepared statement. "The nominal, 1% charge will recover less than half the cost of credit card merchant fees charged to Qantas each year."
A Qantas spokesperson would not reveal the amount of merchant fees charged to the airline. Qantas accounts for 80% of Australia's air travel market.
Qantas' actions came in the wake of major changes in its cobranded frequent-flier program with ANZ Bank. In December, ANZ raised the annual fee on the Qantas ANZ Visa card to A$40 per account from A$27, and to A$95 from A$67 for a gold card. The annual rewards fee increased to A$55 per card and applies to each additional card on an account. ANZ has 600,000 Qantas cards, the ANZ spokesperson says.
ANZ made the changes because the costs of running the rewards programs are too high, an ANZ spokesperson says, denying that the changes were tied to the reduction of interchange fees. However, in an earnings guidance released in February, the bank said that in light of reform, it had identified "shortcomings" in the methodology used to accrue loyalty points on some cobranded cards, including the Qantas card.
Authoritative analysis and perspective for every segment of the payments industry
Authoritative analysis and perspective for every segment of the industry
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