Australia’s credit card system is about to face another seismic shift. The Reserve Bank of Australia (RBA), through its Payment Systems Board (PSB), is weighing a series of reforms slated to roll out by mid-2026.
On the surface, the proposals seem consumer-friendly: banning credit card surcharges and slashing interchange fees (the percentage merchants pay every time you tap your card). But if you collect frequent flyer points, DON'T get too comfortable – because the impact could seriously dent your rewards balance.
Why Points Collectors Need to Care
If you predominately earn you point from credit card sign on bonuses and card churning then your frequent flyer points are funded by the banks, and that money doesn’t come from thin air. Every time you spend, your card issuer earns revenue via interchange fees charged to merchants. When that revenue stream shrinks, as it did in 2017 when the RBA first capped interchange, rewards programs suffer. Gone are the days of sign on bonus points in the 180,000 mark and these days its hard to get anything beyond 100,000 unless its a business card or an AMEX.
Back then, virtually every bank slashed their points earn rates, introduced tighter caps, or increased fees. Some even killed off rewards cards entirely.
Now, with the RBA proposing an even steeper cut, the squeeze on rewards will likely be harsher.
What’s Changing?
Here’s a quick snapshot of the reforms currently on the table:
Ban on surcharges: Mastercard, Visa, and EFTPOS could stop businesses from adding card surcharges altogether (Think ALDI, which pass on the 0.8% amount to their customers in full)
Domestic interchange fees capped: From a current cap of 0.8% (benchmark 0.5%) to just 0.3% per transaction.
International transaction caps: For foreign cardholders spending in Australia, fees would cap at 0.4% (in person) and 1.5% (online/phone).
Amex mostly exempt… for now: American Express isn’t directly caught under these rules yet, but government proposals could bring it into the Payment Systems (Regulation) Act in future.
Merchants might celebrate cheaper processing, but many currently pass that cost to you via surcharges. If they can’t anymore, those costs don’t disappear – they’ll likely just get built into the base price of everything.
I highly doubt we will see prices for goods and service reduce it will just mean more profit for businesses
The Points Fallout
With interchange revenue shrinking by as much as 62.5% (0.8% to 0.3%), banks will need to rebalance the books. Expect one (or more) of these changes:
Lower points per $1 spent – possibly slashed by 60%, now Imagine earning 0.4 points per $1 or only getting sign on bonuses of 36,000!
Tighter caps or tiered earn rates – some card do this already where you will only earn the 1 point per $1 for the first $5,000 spend and then any transaction over this is at a lower earn rate.
Higher annual or program fees (or new ones entirely).
Reduced interest-free periods.
Fewer transfer partners or weaker conversion rates.
Cuts to benefits like lounge access, insurance, or extended warranty.
Some banks exiting the rewards space altogether like we saw in 2017
In a worst-case scenario, a card currently earning 1 point per $1 could drop to 1 point per $3 if banks align with the revenue hit, OUCH!
What About Amex in These Reforms?
Although American Express isn’t directly targeted by the proposed interchange fee caps, there could be indirect effects. If Amex remains more expensive for merchants to accept, some could start surcharging Amex transactions – which would still be allowed – or stop taking Amex entirely.
Amex has already voluntarily lowered its merchant fees in recent years to gain broader acceptance, and in some cases, trimmed rewards or increased annual fees. That balancing act will likely continue as the market shifts.
Winners and Losers
Winners:
Merchants already absorbing card fees, as their costs will drop without needing to reduce prices – Think Woolworths, Coles, Major Petrol Stations, Myer, Bunnings, Office Works ect
Shoppers who hate surcharges, as most will vanish (except for Amex).
Losers:
Points enthusiasts: earning rates will likely shrink, or fees will rise, or both.
Everyone: prices may creep up as businesses spread card costs across all customers.
Why I Rely on My AMEX Platinum
This is why I personally lean on my American Express Platinum Card as my everyday spend card.
It earns a massive 2.25 Membership Rewards points per $1 spent, and those points are incredibly flexible. They transfer to a huge list of airline programs, including:
Qantas Frequent Flyer
Singapore Airlines KrisFlyer
Virgin Australia Velocity
Emirates Skywards
Qatar Airways Privilege Club
…plus many more, including hotel partners.
Right now, AMEX is offering 150,000 bonus points for new cardholders – enough for multiple premium cabin flights when transferred to the right airline program.
It’s not just a card for points chasers; the Platinum also comes with luxury perks like airport lounge access (including Centurion Lounges), elite hotel status, and strong travel insurance.
This is the card I personally use for almost all my day-to-day spending, and it’s a big part of how I continue to travel in business and first class even as other banks scale back rewards.
👉 You can apply for the Platinum Card here via my referral link and take advantage of the 150,000 bonus points offer.
How to Stay Ahead
If you’re serious about points, you’ll need to be more strategic than ever. That means:
Choosing the right card (like a strong-earning Amex for everyday spend).
Maximising transfer bonuses when moving points to airlines.
Redeeming for high-value flights and experiences rather than gift cards or low-value options.
How Our Memberships Help You Earn More Points (Without Spending More)
At The Modern Day Lifestyle, we don’t just help you spend points wisely – we teach our members how to earn far more points from methods beyond credit cards. From stacking cashback and retail promos to leveraging loyalty programs and secret offers, we test and research every strategy ourselves so we can share only what truly works.
Our members regularly earn tens of thousands of points from everyday purchases – no extra spending, just smarter strategies.
We highly recommend joining our membership program now to get ahead of the curve before the RBA changes hit.
Just Want the Tips? Grab All Our Support Articles to your inbox for a Single $5 Coffee
If you’re enjoying this content and want to receive all my supporter-only articles straight to your inbox, you can unlock full access by buying me a once-off coffee ☕ for just $5 (yes, once-off, not a subscription).
As a supporter, you’ll also get real-time alerts via email or the app whenever a new points hack drops – so you can stack offers and earn big before deals disappear.
You’ll unlock insider tips on earning points, travel hacks, and strategies to fly in first-class suites without breaking the bank.
☕ BUY ME A COFFEE BELOW and start earning a stack of points!
Stay tuned – because the credit card points game in Australia is about to get a lot more competitive
