Air New Zealand has replaced BNZ in favour of Westpac as its official Airpoints partner.
BNZ retail banking and marketing director Craig Herbison said the announcement ends a 16-year partnership.
"We've been in this relationship with Air New Zealand since the '90s.
"Things have changed a lot since the '90s. They've changed a lot for our customers and customers have told us that they want more flexibility and choice."
The partnership is due to end at midnight on April 30, at which point BNZ's GlobalPlus products will no longer earn Air New Zealand related benefits, including Airpoints dollars and status points.
"That's why we've gone down the route of cash, because we believe cash is king, it's more immediate for customers - if they want to fly they can go flying, if they want to buy, they can go buying and if they want to retire debt, then they can do that as well."
Instead of airpoints, from May 1 BNZ customers will be enticed with a cash-back offer, where they will earn $1 for every airpoint they would have earned under the current scheme.
BNZ will be launching a new rewards programme later this year which would include travel, Herbison said.
He declined to say how many BNZ customers currently took advantage of the airpoints scheme or speculate on how many customers BNZ would lose as a result of the partnership with Air New Zealand ending.
"That's commercially sensitive to us, in any event, our aspiration is that every customer that sees cash as a replacement for airpoints dollars will see the value in it.
"Rather than having to wait one or two years of earning airpoints dollars and then taking a flight, they can receive cash and they can do something with that immediately."
BNZ would continue its partnership providing the banking platform for Air New Zealand's prepaid travel and credit card OneSmart, Herbison said.
"This is a commercial conversation we've had with them where we're not strategically aligned moving forward.
"We want to give more customers choice to earn on more BNZ products and services - the Air New Zealand relationship was just unable to provide that level of flexibility."
Westpac NZ chief executive David McLean the partnership was a huge deal for the bank.
"There's a lot of customers who from the first of April won't be able to earn airpoints on their BNZ credit cards, probably over 100,000.
"That is potentially a big shift in the market. We know from our research into this type of customer base, that these are people to whom earning airpoints is really, really important.
"They love travel and they want to keep earning it on their spend so they're going to need to be looking around for a credit card that does help them earn airpoints and we've got a very big, easy opportunity to do it.
"It's a really compelling offer and we're going to compete very, very vigorously," McLean said.
"We're very confident we'll win a large proportion of these customers, but we're not putting a target on it."
Air New Zealand's general manager of loyalty Hamish Rumbold said the partnership with Westpac was a significant change in the New Zealand credit card market.
"More than 20 per cent of all credit card spend in New Zealand is on Airpoints earning credit cards.
"As we continue to grow the Airpoints programme we are excited to be able to work with Westpac to offer a wide range of Airpoints earning products and deliver better earn rates on Airpoints members' spend."
Air New Zealand had other existing partnerships with Kiwibank, ANZ and American Express, Rumbold said.
Westpac's new products will initially include Westpac Airpoints MasterCard, Westpac Airpoints Platinum MasterCard, Westpac Airpoints World MasterCard and Westpac Airpoints Business MasterCard.
The bank is also offering an Airpoints earning mortgage with further products to be announced during the year.
"We recognise that changing credit cards can be an inconvenience for people, however Westpac, American Express, ANZ and Kiwibank all have specialist teams in place to make the change an easy one," Rumbold said.
Air New Zealand's Airpoints programme has grown by more than a quarter of a million members over the past 12 months to 1.8 million.
BNZ spokeswoman Katherine Cornish said accrued airpoints would remain with Air New Zealand.
"A good number" of customers currently took advantage of the BNZ airpoints programme, Cornish said.
"It's fair to say that some might change cards and go to someone different, but it's difficult to say at this stage."
Cornish declined to comment on what BNZ had forecast the cashback programme would cost the bank.