Kiwibank ends Airpoints credit card rewards: State-owned bank says higher costs hit scheme

• Kiwibank is ending its Airpoints credit card rewards due to rising costs and regulation changes.
• Cardholders can earn Airpoints until October 31, then will be moved to the new Platinum Visa.
• The new card offers a lower interest rate, more interest-free days and travel insurance benefits.

Kiwibank is ending its Airpoints credit card rewards, which it says is due to increasing costs and regulation changes.

Kiwibank chief customer officer Mark Stephen said the state-owned bank’s new Platinum Visa would make up for the loss of Airpoints.

Cardholders will be able to earn Airpoints until October 31 and will then be moved to the new card automatically, Stephen said.

It was a joint decision between Kiwibank and Air New Zealand to end their partnership. Airpoints are accrued for every $115 spent with the credit card and can be spent on a dollar-for-dollar basis on Air New Zealand flights, as well as goods and services on the Airpoints store.

Stephen said the bank figured its Airpoints credit card schemes “are no longer the most effective way to achieve” value for its customers.

The regulatory and economic landscape had changed significantly over the past decade, impacting the value and viability of the scheme, he said.

Interchange fees paid on transactions, charged by the bank that issued the card to a merchant’s bank receiving the funds, were reduced in 2022. The Commerce Commission introduced new pricing standards under the Retail Payment Systems Act to lower the fees.

Kiwibank said it had meant some increased costs had been passed on to cardholders and a significant portion was covered by card issuers.

The Commerce Commission has proposed lowering the fee further, with a decision likely by the end of July.

Kiwibank customers will now have to spend more money to earn Airpoints dollars.

Stephen said the alternative to ending the rewards scheme would have been reducing the points-accrual rate or increasing interest rates, decisions the bank did not think would be in its customers’ best interest.

“Kiwibank prioritises investment that provides value to the greatest number of customers. After a thorough review, we concluded that these products are no longer the most effective way to achieve this.

“The alternative to closing the products would be to reduce the rate at which points are earned or to pass on increased costs through higher interest rates – options we believe are neither fair nor in customers’ best interests, as it would mean that customers who do not repay their balance in full every month would further subsidise rewards for those who do."

Stephen said the bank’s new Platinum Visa rewards and benefits would include a lower interest rate and more interest-free days. The card also offers international travel insurance and new domestic travel insurance.

“Based on customer feedback about what they would value in a new card, our enhanced Platinum Visa now offers a range of benefits that reflect this.”

Stephen said Kiwibank also offered a Zero Visa card, with no annual fee and a competitive 12.90% a year interest rate.

Air New Zealand chief digital officer Nikhil Ravishankar said it regularly reviewed its partnerships “to ensure we’re delivering value to our 4.8 million members, our partners, and our Airpoints programme”.

Air NZ still had three “strong” banking partners offering Airpoints credit cards, Ravishankar said.

“In addition, we are always looking for opportunities to offer new benefits to our members, whether that be through new partners, like the recent introduction of HelloFresh, Sharesies, and Everyday Rewards, or exploring new ways to diversify our offering through different products.”

Raphael Franks is an Auckland-based reporter who covers business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022.