Australian credit card regulation change affects travel insurance provision

The Reserve Bank of Australia (RBA) is removing surcharges from credit card networks from 1 October, meaning that people will not be charged for using their cards at checkout.

However, the knock-on effect of this is that card providers and banks are changing the benefits that customers are receiving when they use their cards.

When it comes to travel, many Australian customers will use a credit card to pay for their holiday specifically because doing so will trigger the benefit of travel insurance coverage for that trip.

With the removal of surcharges, however, it has been reported that some providers are changing the benefits on offer.

Background to banking change

The RBA has concluded that it is in the public interest to remove surcharging for all designated card networks (eftpos, Mastercard, and Visa) from 1 October 2026. Designated card networks are subject to formal regulation by the RBA.

To implement this, the RBA has removed its prohibition on ‘no-surcharge’ rules with effect from that date.

When effective, these changes will allow the designated card networks to impose a ban on surcharging for credit, debit, and prepaid card payments on their networks.

Credit card company reaction

Ahead of the rule change on 1 October, Australia and New Zealand Banking Group (ANZ) has joined other big banks such as Commonwealth Bank of Australia (CBA), Westpac, and NAB in altering the rewards it offers its credit card customers.

Depending on which type of card customers hold, they could receive limited or no travel insurance coverage. Canstar’s Data Insights Director, Sally Tindall, said: “ANZ is the last of the big four to announce exactly what its rewards programme will look like after it goes under the knife as a result of the RBA’s surcharge ban.”

She added: “For ANZ Rewards customers, it will be a double whammy of higher interest rates and stripped-back perks. The cuts to travel insurance could push some people into taking out a standalone policy, or potentially turning their back on the card altogether.”

For CBA customers with eligible accounts, international trip cancellation cover costs will be capped at A$2,500 per cardholder (currently they are unlimited), while extended warranty and other insurances are being scrapped under the bank’s changing rules.

A Squaremouth survey earlier this year revealed widespread misunderstandings around credit card exclusions and limits, highlighting costly gaps in medical, cancellation, and pre-existing condition cover.