Latest news with #interchangefees
RNZ News
28-05-2025
- Business
- RNZ News
Are credit card rewards schemes worth it?
Photo: 123RF Credit card reward schemes are likely to be scaled back further as pressure goes on interchange fees, Consumer NZ says, but most aren't delivering value for many New Zealanders, anyway. On Tuesday, Kiwibank and Air New Zealand announced they were cutting ties and Kiwibank would no longer offer an Airpoints credit card. Kiwibank pointed to increasing regulation of interchange fees, which are the fees paid by the bank that processes a transaction to the card issuer. The Commerce Commission has already introduced new standards to reduce these fees, which led to a reduction in some credit card rewards in 2022. More reductions are expected to be announced soon, to come into force at the end of the year. Consumer NZ said its analysis showed that credit card reward schemes were only benefiting big spenders who used their cards frequently and paid off the balance in full every month. People would generally need to spend $25,000 on their cards over two years, and not pay interest on it, to make a rewards scheme worth the fees that the cards charged. "Low spenders, and those with interest-bearing debt, don't benefit from rewards and are effectively subsidising high spenders. We don't think this is fair so we have supported the regulation of interchange knowing this would likely result in card issuers scaling back rewards programmes, increasing card fees or cancelling schemes altogether," a spokesperson said. "Interchange regulation will also reduce the cost for merchants of accepting card payments. This should, in theory at least, result in lower card payment surcharges for consumers. Unfortunately there's no guarantee these savings will be passed on to consumers though so we have been calling for surcharge regulation for a number of years. The commission is expected to consult on this later in the year." Banking expert Claire Matthews, of Massey University, said it was to be expected that rewards schemes would be pared back as interchange fees reduced. "Although it does depend on the level at which they are capped and how that is split between the parties. However, those fees have been a key source of the revenue to fund the rewards so any reduction can be expected to be passed on."
RNZ News
27-05-2025
- Business
- RNZ News
Kiwibank and Airpoints part ways
Kiwibank said it would replace its Airpoints-earning card with one that has a lower interest rate. 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. Air New Zealand said the decision was made jointly between it and Kiwibank. Chief digital officer Nikhil Ravishankar said it regularly reviewed its partnerships to ensure it was delivering value to Airpoints members and partners. "We have three strong banking partners who all offer Airpoints credit cards for Airpoints members, and we know Airpoints members place great value on having the ability to earn Airpoints and other travel-related benefits on their everyday purchases. "In addition, we are always looking for opportunities to offer new benefits to our members, whether that be through new partners, like the recent introduction of HelloFresh, Sharesies, and Everyday Rewards, or exploring new ways to diversify our offering through different products." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
27-05-2025
- Business
- RNZ News
Kiwibank drops Airpoints credit card
Kiwibank said it would replace its Airpoints-earning card with one that has a lower interest rate. 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. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
The Independent
21-05-2025
- Business
- The Independent
Millions of UK consumers eligible for compensation from Mastercard
Mastercard will pay £200 million in compensation to UK consumers after a class-action lawsuit. The lawsuit, initiated in 2016, challenged Mastercard 's interchange fees between 1992 and 2008. Around 46 million UK shoppers are eligible to claim compensation, estimated between £45 and £70 each. Consumers can register online for a payment, regardless of whether they ever held a Mastercard. Payments are expected to be distributed by the end of the year to registered individuals.
