Westpac will stop directly-issuing American Express credit cards from next year in a move that shakes up the bank’s frequent flyer plastic – but rather than axing AMEX altogether, Westpac will launch a new range of co-branded American Express cards, directly issued by American Express.
That means American Express Australia will take charge of these ‘Westpac’ cards: so customers would access Internet banking via the AMEX website – not Westpac’s website – and would receive card statements from and remit payments to American Express directly. Customer service would also be handled by AMEX.
It’s similar in concept to American Express’ existing David Jones-branded cards, where American Express is the direct card issuer, and the David Jones logo appears on the card as the branding partner.
In an emailed statement to media, Westpac cites “regulatory changes to credit cards announced by the Reserve Bank of Australia” as the reasoning behind the overhaul: as those regulations have now cut the ‘interchange’ revenue Westpac earns whenever a cardholder uses a Westpac AMEX product to make a purchase.
In turn, the number of frequent flyer points awarded per dollar spent on these Westpac cards was reduced in July 2017 when the new regulations kicked in, as banks use that interchange revenue towards the cost of purchasing frequent flyer points from the airlines as a reward for customers.
However, cards directly issued by American Express Australia aren’t subject to the new interchange fee cap: so for Westpac, this move circumvents that cap and allows the bank to award a higher number of frequent flyer points to customers than offered today, to better-compete with other direct-issued AMEX cards.
Australian Business Traveller exclusively revealed this plan back in January 2017, when Westpac also floated a draft of how the transition process could work for customers switching from one card issuer to another.
Under that plan, existing Westpac American Express cardholders would merely be “introduced” to an American Express direct-issued card and would file a “shorter than normal application via American Express” to complete their migration, before retiring their existing Westpac-issued AMEX card.
When asked if this process would fall afoul of the new RBA regulations or cause a further set to be introduced, an American Express spokesperson told Australian Business Traveller that "American Express and Westpac consulted extensively with the Reserve Bank of Australia (RBA) and a number of other financial regulatory bodies throughout the development of this product."
"The new products are no different to a range of cards currently issued by American Express and distributed through a commercial partner – the American Express partnership with David Jones, Qantas and Virgin Australia are examples of this."
Westpac will debut its new range of rewards credit cards in “early 2018”, and confirms that those cards will continue to provide the option of earning Qantas Frequent Flyer points or Westpac Altitude Rewards points.
They’ll also offer an “accelerated reward points earn rate, uncapped points, complimentary retail and travel insurance, and other benefits offered exclusively by American Express.”
Existing Westpac American Express cards will be closed in “early April 2018”. It’s expected that cardholders could either migrate their account to American Express direct to have only an AMEX card, or could continue banking with Westpac directly, but with a Visa or Mastercard instead.