Westpac to stop directly-issuing American Express credit cards

By Chris Chamberlin, November 2 2017

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.

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!

ajd

ajd

Qantas - Qantas Frequent Flyer

27 Nov 2014

Total posts 40

So, that's 3 out of the Big 4.

If I'm a merchant who's considering whether or not to bother with taking Amex, how would this affect my decision?

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

I can only speak from a personal perspective here, but I generally don't make a habit of returning to businesses that don't accept American Express. I do have a 'non-AMEX' card for the odd occasional purchases, but I actively seek out businesses that welcome the card I prefer to use and make a point of returning to those businesses instead of their non-AMEX-accepting competitors.

 

I don't buy the "it's too expensive" argument either from some business owners: if a business is paying 1% for Visa/MC and 2% for AMEX and I make a $20 purchase with AMEX, they pay 20c more to accept AMEX and get $19.60 at the end of the day. If they don't accept AMEX and I make the same purchase somewhere else, they've lost 100%, not 2%.

 

Some businesses choose to surcharge and if the surcharge is fair and lawfully disclosed I'll often pay it, but would then actively seek out other options where there are no surcharges for future purchases. For example, I never shop at JB Hi-FI because they surcharge 2.65% for AMEX. Instead, I just go to Harvey Norman or The Good Guys instead where there's no surcharge: and either the base price is the same as JB (in which case I'm saving money but not paying a surcharge but still getting full points via AMEX), or I'll just ask them to price match and will then pay by AMEX.

 

Plenty of other examples, but if it were my business, I'd rather lose 2% in fees than 100% by losing a sale!

ajd

ajd

Qantas - Qantas Frequent Flyer

27 Nov 2014

Total posts 40

I guess there really isn't much for a business to lose by at least accepting Amex with a surcharge, so I don't really understand why merchants don't do that. Personally, I'll take an Amex-accepting business over a non-Amex business all else being equal, but I'm otherwise fairly happy to pull out the Mastercard instead.

But what I'm really getting at is that this move is going to ultimately going to shrink the pool of Amex cardholders in Australia and thus the number of potential customers affected by not taking Amex. I've noticed that on the cardholder side, Amex has really stepped up its marketing about merchants which now accept Amex or have removed surcharges over the last few months, and I wonder whether that's to motivate customers to try and counteract a decrease in merchant interest post RBA changes.

But this is all speculation with no numbers, and I have no idea how the number of Amex-Amex cardholders compares to bank-Amex cardholders...

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

For most Aussies who care about credit card points (and are the type to have an AMEX in the first place), losing a Big Four AMEX isn't so much about "oh no, I won't get as many points any more because I'll have to use Visa/Mastercard everywhere instead", it's about "OK, so that's dead, what should I replace it with?", which drives customers to new AMEX products in the market.

(You can't assume that former or soon-to-be-former Big Bank AMEX users won't replace the outgoing AMEX with a new one, especially if they're already familiar with the concept of AMEX, and by already having used one, know where it's accepted.)

Certainly, not everyone will bother, but many will: and it's those people who are the most engaged with earning credit card points and will be wanting to use their new AMEX in as many places as possible.

The hardest hurdle is getting people to try AMEX in the first place, because there's a perception among some people that's is not very widely accepted or that there'll almost always be a surcharge - so there's been a big focus lately from AMEX on merchant acceptance and communicating this to members, particularly when new chain stores come on board or surcharges are removed by existing merchants.

radio8tiv

radio8tiv

15 Mar 2016

Total posts 4

I'm actually the opposite and actively seek out my purchases at JB, but I add in an extra step. I go to a local supermarket first and by gift cards to JB gaining me at least 3 points per dollar (platinum edge) then just buy what I want, when they complain about the amount of gift cards I'm using (12 last time to buy the iPhone) I just comment that if they did not charge for using Amex, I would have purchased it that way.

peterd647

peterd647

Qantas - Qantas Frequent Flyer

23 Dec 2015

Total posts 22

Agree with ChrisCh. There's enough merchants that take Amex without a surcharge I avoid merchants that don't accept Amex. There are also ways some roundabout ways to deal with those that may not accept Amex but accept PayPal for example. I do shop at JB Hi-Fi (mostly because I work near a store), but I buy JB gift cards from Coles first (which I pay for using Amex avoiding the surcharge) and then use those gift cards at JB.

JakeDrake

JakeDrake

13 Mar 2014

Total posts 27

Have just applied for and had a Westpac Altitude Black approved because it was one of last majors with an Amex earn rate >1 FF point per $. Beforehand I rang Westpac and asked them about any plans to reduce/ditch/change Amex and was told "there are no plans". One week later this announcement. Shouldn't be surprised that I wasn't told but if this latest "enhancement" results in lower earn rate I will likely be closing the account once I've received my bonus points.

pkjames

pkjames

Qantas - Qantas Frequent Flyer

21 Jan 2017

Total posts 49

as a small business owner, AMEX offered me 1.5% fee compared to 1% for visa. AMEX has been quite aggressive in expanding, I don't see the fee been a problem at all. I also try my best shop on places that accepts AMEX (without the additional fee).

Lifestobelived

Lifestobelived

27 Mar 2014

Total posts 40

So migrate it over (with 0 bonus points??) instead of just going and applying for a direct AMEX with a big haul of bonus points, and as soon as you migrate across it resets to another 18 months on closing before you can reapply for a direct AMEX card and qualify for bonus points???

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

You'd need to wait for the products to actually launch to see what the offer is and what the T&Cs say.

zoomzoom

zoomzoom

21 Aug 2015

Total posts 90

Don't expect a bank to do you any favours. Its all about their profits.

zoomzoom

zoomzoom

21 Aug 2015

Total posts 90

Well I suspect Westpac won't do any favours for existing Altitude Black card holders. So as an existing card holder I'll be looking around and considering options. I'm totally over banks treating existing customers badly all in the name of winning new business and making even bigger profits. See you later Westpac.

BOF

BOF

15 Mar 2016

Total posts 15

Interesting, I have a Westpac SQ/Krisflyer Visa with companion Amex, which of course is no longer available. The Amex is still earning 1.25 miles/$ having come down from 1.5 back in about 2015.
Definately a matter of wait and see - I can't see Amex offering KF miles, and I wonder what Westpac will do with the Visa? I'll probably dump that as you can earn more with other cards.

Holly

Holly

03 Nov 2017

Total posts 2

Chris thanks for updating your readers. We too have the old Krisflyer AMEX/VISA cards. Do you know if these will be affected?

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

Westpac-issued AMEX cards will all close in April 2018, so yes, but you'll have to wait until Westpac shows the rest of its hand to see what your options are.

gururose

gururose

01 Mar 2014

Total posts 6

any idea what they will charge for just keeping the visa?

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

If we had that information, it'd be in the article. Expect to know in early 2018.

camtraveller

camtraveller

Qantas - Qantas Frequent Flyer

25 Feb 2017

Total posts 7

Hi Chris ,

Looks like they have just updated their website with these details (no details on the AMEX transfer offer yet, which is an important piece of the puzzle for existing cardholders like me).

But if you stay with just the Westpac MC Altitude Black:

Annual fee reduced from $395 to $250. PLUS a $50 rewards fee if you chose the QF version of the card.

Earn rate for QF will increase from 0.625 to 0.75 uncapped.

My card rolls over in Jan, so I'll need to have a serious think about whether its worth keeping.

Link to Westpac

Iggybah

Iggybah

03 Nov 2017

Total posts 1

This is why I ditched my NAB Platinum Qantas AMEX with VISA and went to the AMEX Premium Qantas card. I still have my Westpac Altitude Amex (which I don’t use) and VISA, which I now use when I can’t use AMEX. For me it’s about most points for least total cost per year and flexibility.

rowwdy

rowwdy

Qantas - Qantas Frequent Flyer

21 Mar 2013

Total posts 137

Interested to see whether Westpac has been able to negotiate a fee-free option for home loan package customers to get these new cards still included.

kazda

kazda

Virgin Australia - Velocity Rewards

16 Sep 2014

Total posts 7

As my current Westpac / Amex card is up for renewal in February 2018, I'm interested to find out Westpac will do in relation to the annual card fee of $295 for customers whose cards will only be valid for a few months before they close the account.

vperez

vperez

Qantas - Qantas Frequent Flyer

26 Sep 2014

Total posts 49

This and what the fee for their Black card will be going forward are the questions I have. I do not see the value in paying 395pa just for the MC when I’ve only used it where AMEX was’t accepted.

vperez

vperez

Qantas - Qantas Frequent Flyer

26 Sep 2014

Total posts 49

Correction 395$.

camtraveller

camtraveller

Qantas - Qantas Frequent Flyer

25 Feb 2017

Total posts 7

@vperez They have just confirmed on the website that the existing annual fee for Black will reduce from $395 to $250 plus $50 for selecting QF. Earn rate will increase from 0.675 to 0.75 per $1 spent, uncapped.

No news yet on the AMEX transfer details.

AeroSexual

AeroSexual

Qantas - Qantas Frequent Flyer

27 Jan 2016

Total posts 14

I'm wondering if this is at least partly Westpac's way of stopping credit card customers leaving for those who support Apple Pay when they won't offer it. With an AMEX issued/controlled card, that functionality will presumedly be available as part of the deal. If so it's too late for me - after 30 years banking with Westpac, I left a few months ago (not 100% just for Apple Pay, other issues with Westpac) - but it was a bonus for me - I love using my Apple Watch to pay for almost everything while the points continue to rack up - so easy and no plastic in the pocket anymore!

rowwdy

rowwdy

Qantas - Qantas Frequent Flyer

21 Mar 2013

Total posts 137

On the positive side, hello Apple Pay!

BOF

BOF

15 Mar 2016

Total posts 15

Well it's happening - just got my Wespac Krisflyer statement complete with note that "Your Singapore Airlines Westpac Platinum American Express® Card will close on 4 April 2018"

Cards expiring in March close on 31 March 2018.

Krisflyer visa continues - no mention of introduction to American Express direct issued card - no indication of any fee change on the now visa only Krisflyer card.

And usual " We apologise for any inconvenience this may cause" with regard to having to change any automatic payment - which is the real pain in the ar$e!

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