Following the lead of Capital One and other leading EU issuers, Royal Bank Scotland (RBS) has chosen to cut its credit card rewards program in the wake of the European Parliament’s decision to cap interchange fees earlier this year:
“RBS said that the impact of the ruling meant it was no longer able to ‘recoup the costs’ of offering a reward scheme.”
“Credit card companies will see the amount they earn from transactions fall from as much as 1.85% to a maximum of 0.3%. Debit card fees will be capped at 0.2%. Reward and cashback schemes have traditionally been funded from the revenue earned through these so-called interchange fees.”
It remains to be seen if the cap will result in savings for consumers or a more rapid adoption of digital payments as supporters claim, although it seems likely to continue shaking up the competitive landscpe for European issuers:
“Other companies are still deciding whether they can afford to offer these lucrative rewards.
Santander, which runs the enormously popular 123 cashback schemes for its current account and credit card, did not rule out the possibility of future changes.”
Overview by Alex Johnson, Sr. Analyst, Credit Advisory Service at Mercator Advisory Group
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