Kiwibank drops Airpoints credit card
Photo:
Kiwibank
Kiwibank says a change to the regulation of interchange fees is behind its decision to stop offering a credit card that earns Airpoints.
It said on Tuesday that it had decided to end its partnership with Airpoints.
It would replace its Airpoints-earning card with one that has a lower interest rate, more interest-free days and travel insurance benefits.
It said the regulatory and economic landscape had changed significantly over the past decade and increased costs and changes to interchange fee regulations had affected the value and viability of the Kiwibank Airpoints reward programme.
When a transaction is made, the bank that processes it for the merchant pays a fee to the card provider, called an interchange fee.
The Commerce Commission has promised more reductions to interchange fees, with a decision due by 31 July.
In 2022, new rules for merchant fees were forecast to mean cuts to credit card reward programmes. At the time, ASB proposed and then backtracked on plans to significantly increase the amount people had to spend on their credit cards to earn rewards.
Kiiwbank said it supported promoting competition and efficiency but lowering interchange fees could reduce the variety of payment options available to customers.
Mark Stephen, Kiwibank's chief customer officer for retail, said Kiwibank wanted to prioritise investment that provided value to the greatest number of customers.
"After a thorough review, we concluded that these products are no longer the most effective way to achieve this.
"The alternative to closing the products would be to reduce the rate at which points are earned or to pass on increased costs through higher interest rates - options we believe are neither fair nor in customers' best interests, as it would mean that customers who do not repay their balance in full every month would further subsidise rewards for those who do."
He said Kiwibank also offered a Zero Visa card with no annual fee and a 12.9 percent interest rate.
Customers can continue to earn Airpoints until 31 October, at which point they will move to a Platinum Visa card automatically.
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