American Express is changing its rewards program as it battles for market share in a changing payments market.
The changes affect both the number of points consumers earn for each dollar they spend (known as earn rates) and the number of points they have to redeem to ‘buy’ rewards (known as burn rates).
According to Amex, the average earn rate on the majority of cards will increase, with the exception of cards that directly convert to airline points. The earn rate on these cards will decrease, in most cases by 0.25 percentage points.
Increases in earning capacity will be offset by changes to Amex’s burn rates for their in-house program which in most cases will increase by between 30 and 50 per cent.
For example, cardholders currently need 13,500 points to redeem a $100 gift card through Amex rewards. When the changes take affect on 15 April 2019, card holders will need 20,000 points – an increase of 48 per cent.
Amex has also changed its merchant fees
Since July 2017, the credit card provider has been reducing how much it charges merchants, in a bid to “close the gap” between its fees and those of its rivals.
The move is designed to increase the availability of Amex as a payment system – a core source of frustration for some cardholders – and reduce the amount Amex customers have to pay in surcharge fees. The provider is hoping it will lead to more merchants opting to waive surcharge fees altogether.
“More than 120,000 places have joined American Express since the beginning of 2017 – including Tigerair, H&M and Specsavers – and the number continues to grow.”