Credit Card Rewards Get Cut in Half
What New Zealand credit card loyalty managers have been fearing for years finally happened at the start of May. The regulator cut the value of their credit card loyalty points in half. That’s the impact of the newly announced interchange regulation which will reduce the fees merchants pay to credit card companies and in turn what credit card companies give their customers in rewards.
Why It Matters for New Zealand’s Loyalty Industry
Loyalty points are a $4bn industry in Australia with half of that being contributed by credit cards. Comparatively, the New Zealand loyalty points industry is worth at least $500m annually. More important than the value of these points is the positive economic impact a loyalty program drives in a company’s sales (7% up in the first year, 11% after 3 years) and gross profit (up 6%).
The impact for banks is big but the impact for the rest of New Zealand loyalty programs including airlines and more particularly retailers is arguably bigger. Who or what might a loyalty manager in New Zealand have to watch out for?
A Lot of Regulation all at Once
It’s not only interchange. New Zealand is facing a series of changes which individually and over time altered the power balance in loyalty ecosystems offshore but are all arriving at the same time here. Privacy regulation, the beginning of a Customer Data Right discussion (Open Banking to the rest of us), and the death of third-party cookies are creating winners and losers.
Privacy compliance is of course important but most privacy decisions and by extension customer data strategies are being driven by a fear of doing anything that might in any way compromise customer data.
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