If business owners want to keep the loyalty points flowing, they will need to rethink their approach to credit card, loyalty card and purchasing activity.
A loyalty-points Armageddon, or “cardmageddon”, is coming to those who are addicted to airline and loyalty points earned from credit card purchases. For years, Australian small-business owners have been using points earning cards to maximise loyalty points and earn rewards. On 1 July 2017, the days of the big points-earning credit card comes to an end.
New RBA rules on bank interchange fees will cap the amount banks can charge merchants for credit-card transactions, dramatically reducing the amount of money banks have to spend on awarding frequent-flier points and miles. Analyst firm Novantas estimate that the value of frequent-flyer points purchases by banks will fall by about 30% from the current $700 million a year. Award amounts will be cut and experts believe the high-earning bank-issued cards will simply disappear.
This means that if business owners want to keep the loyalty points flowing, they will need to rethink their approach to credit card, loyalty card and purchasing activity.
To get more out of your loyalty membership leading up to and post 1 July 2017, here are some suggestions:
- Track the value of your loyalty: Track the value of your points carefully, their validity period and what you can redeem with them. Tracking apps like Tripit and AwardWallet capture the status of multiple programs subscribed and offer additional features like tracking travel itineraries. Look out for new rules and plan changes leading up to 1 July to make sure you are ready to adjust.
- Streamline your rewards stream: Choose no more than two or three loyalty programs, which are most aligned with your purchasing habits. For example those tied to supermarket purchases and similar third-party schemes are not affected by the impending RBA change.
- Your point of purchase matters: Plan your purchases around retailers and services linked to your chosen rewards streams. Avoid signing up for new proprietary programs for one-off purchases. For example Agoda.com allows earning with 32 loyalty partners around the world for accommodation bookings at more than 1 million properties via our PointsMAX program. Partners include Virgin’s Velocity, Singapore Airlines, American, Delta, United and many more.
The days of easy points earning on a credit cards will soon be over. It’s time to do some research on how your favourite program will be changed and look to alternatives to continue maximising your earning potential.
Timothy Hughes, VP Business Development, Agoda