Learning from the fate of points and rewards in Australia to ensure Canada doesn’t make the same mistake.

This election, reward points are on the line. The NDP is calling for a cap on interchange fees.

This may seem like a good idea on paper, but when Australia did this, it had a significant impact on the ability of consumers to collect reward points using their credit cards. Because of their actions, Australian consumers no longer have access to the kinds of rewards and benefits we enjoy in Canada. We can’t let that happen here.

In 2002, the Reserve Bank of Australia (RBA) forced a cap on interchange fees, and it had devastating effects on consumers and their reward points. The Macdonald-Laurier Institute found that consumer benefits on these cards fell by 33%. After these changes, the average fee for a standard reward card increased by 40%, which has a direct impact on the middle class. Cards used by individuals with higher incomes only had their fees increase by 30% over the same period. Unfortunately, the RBA’s hope that the cap would save consumers money doesn’t seem to have happened. In the 14 years it’s been in effect, there has been no substantial evidence that merchants have passed these savings onto consumers.

To read more on this, click here to access our article on the Macdonald-Laurier Institute.

And to make matters worse, it didn’t stop in 2002. In 2017, Australia took a step further and capped this fee even further. The Australian Business Traveller called this a “points apocalypse”.

The unintended consequences of these changes are that we will get fewer reward points, we will pay higher fees—and looking at Australia, it’s unlikely any savings will make it into the hands of consumers.

That’s why the CCRC is here. We want to ensure that Canadian consumers are protected from the unintended consequences of messing around with interchange. With your help, we can ensure that elected officials don’t change the way we collect points—no matter who gets elected in October.

– Andrew Lang,
Interim Executive Director, CCRC