The Reserve Bank of Australia (RBA) has ruled that credit card fees are to be reduced, in a move that will secure the dominance of payment cards over cash in Australia.
From September 2016, credit card interchange fees in Australia will be capped at 0.8% according to a new ruling from the RBA. At the same time, a common practice within the Australian airline sector of imposing surcharges or service fees for using credit cards will also be banned.
For a majority of credit card consumers, the lowered fees will be a welcome development. However, with less revenue from fees, banks are expected to reduce the benefits they offer via rewards programs. For credit card consumers who are intensive users of such benefits, this will result in the loss of many of the perks they have previously enjoyed. To continue receiving the same benefits, consumers may find themselves paying a higher annual fee to maintain the current tier of credit card rewards.
One thing is clear: Australia is being pushed closer towards being a cashless society. Payment cards are now becoming the standard payment tool, with cash taking a back step. Rather than offering reward schemes to encourage credit card usage, it is time to come clean and focus on improving Australia’s POS and mPOS networks to enable wider and more convenient opportunities to pay by card.
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