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RBA reforms to card payments to impact travel costs

June 2, 2016 Business News No Comments Print Print Email Email

The RBA Payments System Board has concluded its Review of Card Payments Regulation which will have a significant impact on travel costs going forward.David Newington, Country Manager Australia at AirPlus International is available for comment on how the reforms will affect travel costs and payments.

What are the findings?

The review has recommended a series of reforms which will affect interchange fees and surcharges. Consumers will still pay surcharges on some payment cards, but where they do, surcharges will be no more than the amount the merchant pays its bank or payments provider to accept that type of card.

How will the reforms affect travel costs?

The new framework will mean that consumers will be much less likely to face fixed dollar surcharges. If merchants, such as airlines, that currently impose fixed dollar surcharges wish to continue to surcharge, they will have to switch to percentage-based surcharges, unless their payment costs truly are the same across all transaction sizes.

The reforms are expected to reduce the costs of goods and services for consumers and provide them with greater choice. However, the rebates paid to commercial and private customers and the benefits of rewards programs on premium cards are expected to reduce. The major banks are already slashing the value of their credit card rewards points in anticipation of the changes.

Comments from AirPlus International

David Newington, Country Manager Australia at AirPlus International said, “The reforms are good news for consumers who can expect a reduction in their travel costs. However, this will likely coincide with changes to rebates and rewards programs.”

“Businesses with a centralised travel payment system which provides transparency across total travel costs will be better placed to maximise the potential savings without sacrificing too much when it comes to rebates and rewards benefits.”

“The effects of these changes in rebates, benefits and the costs in the booking process mean that it is essential for every company to review its payment program. This review must include the mix of payment types, lodge card, corporate card, virtual, to ensure you are wringing the maximum value from each transaction.”

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