Have you ever wondered how credit card loyalty schemes manage to “reward” customers with perks such as frequent flyer points just for spending money on their cards? And who really pays for these goodies?

This arcane system is being put under the microscope thanks to the Reserve Bank’s plan to overhaul the system of credit and debit card surcharges, which was announced in July.

The Reserve Bank wants to ban credit and debit card surhcarges.Credit: Jessica Shapiro

It’s mind-bogglingly complex, but the bottom line is that of course someone is footing the bill for those frequent flyer miles. In coming weeks, expect to hear more debate about who should pick up the bill.

The Reserve Bank is expected this month to release submissions from banks, other financial firms, small and medium businesses, and many others airing their views on the central bank’s plan to ban an estimated $1.2 billon in pesky credit and debit card surcharges. These are the percentage fees charged by businesses, such as hotels and restaurants, for using a card. The Reserve Bank estimates they cost every card-using adult about $60 a year each.

Surcharges were originally meant to encourage us to consider using a cheaper payment method, but the current system is no longer working as intended.

As well as banning surcharges, the Reserve Bank also wants to cut fees that merchants are charged for accepting card payments. It plans to do this by........

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