A structural shift in Australia’s card payments system is set to disrupt one of the travel insurance sector’s most significant distribution channels, with regulatory changes taking effect October 1, 2026, creating conditions that could materially reduce consumer access to complimentary travel insurance policies bundled with premium credit cards.
The Reserve Bank of Australia’s (RBA) Conclusions Paper, published March 31, 2026, confirmed a ban on card payment surcharges across the eftpos, Mastercard, and Visa networks alongside reductions to interchange fee caps. Issuer interchange revenue is expected to fall by an estimated $660 million per year, with the bulk of this reduction affecting issuers of consumer credit cards. The RBA’s paper acknowledged the likely industry response: issuers indicated they could respond to reduced interchange revenue by lowering rewards points, shortening interest-free periods, or raising credit card interest rates.
Banks have begun acting ahead of the deadline. NAB phased out complimentary travel insurance on several of its cards from May 2026, while ANZ reduced its international cover cap from unlimited to $20,000 and raised the excess to $350. NAB’s published policy documentation confirms the removal applies to international and domestic travel insurance and rental vehicle excess insurance in Australia for cards reclassified under its new Level 4 card structure.
The underwriting exposure in this segment is concentrated. Policy disclosure statements for ANZ, Westpac, NAB, HSBC, and Bank of Melbourne confirm that Allianz Australia Insurance Limited – operating through AWP Australia Pty Ltd, trading as Allianz Global Assistance – underwrites complimentary travel insurance across each of these institutions. As banks respond to changing economics by scaling back complimentary insurance benefits on selected card products, access to these policies appears to be becoming more limited ahead of the October reforms.
Complimentary travel insurance policies are not automatic. The Australian government’s MoneySmart service notes that they typically require the cardholder to pay for a certain amount of travel costs – such as a return flight or accommodation – on the card before cover is activated. For most major banks, including CommBank, NAB, Westpac, HSBC, and St. George, the threshold is $500 in a single qualifying transaction. ANZ’s threshold is $250.
This activation mechanism sits at the centre of the commercial problem now facing travel agents. Once the surcharge ban takes effect, the cost of processing credit card payments – previously passed to customers as surcharges – falls entirely on merchants. For agencies operating on narrow margins, credit card acceptance may become commercially unviable for certain transactions, cutting off the qualifying spend that triggers coverage.
Justine Waddington, director of Encounter Travel, described the direct consequence: “Selling an airfare with little or zero commission means a customer’s credit card payment can see us face a loss for selling that airfare.” She noted that airline commissions for agents typically range between 0% and 1%. “Not only could this mean they can’t pay on credit, can’t earn points on the dollars they spend on their holiday bookings ... but the ability to activate a complimentary travel insurance policy may disappear, she said, as reported by The Sydney Morning Herald.
Cola Maurirere, head of sales at Travel at 60, said absorbing credit card processing fees would cost her business roughly the annual salary of a travel agent. “We can’t absorb that, but we also can’t take away paying by card as an option for our customers,” she said. Dean Long, chief executive of the Australian Travel Industry Association (ATIA), said structural change in agent payment practices is coming. “There will be agents who no longer accept credit cards. Surcharging has allowed them to recoup their costs while maintaining customer perks,” he said.
The commercial stakes are substantial. Industry analysis published in the HelloSafe 2026 Australian Travel Insurance Barometer – which draws on Australian Prudential Regulation Authority (APRA) data, IBISWorld, and insurer and aggregator data – estimates that credit card insurance accounts for approximately 28% of the Australian travel insurance market by policy type, second only to single-trip standalone policies at around 50%. No disaggregated primary regulatory source exists for this specific channel figure, and it should be read as an informed industry estimate. It nonetheless indicates that credit card-linked coverage represents a material segment of a domestic market that IBISWorld valued at $1.4 billion in revenue in 2026.
Consumer survey data supports the scale of reliance. The 2024 Insurance Council of Australia (ICA) and Department of Foreign Affairs and Trade (DFAT) Travel Insurance Survey – a nationally representative study of 1,007 Australian overseas travellers – found that 25% of insured travellers said they held coverage through a credit card, employer, or similar arrangement rather than purchasing a standalone policy. The 2025 ICA/DFAT survey, released in October 2025, found that 23% of young travellers aged 18-29 went overseas without any travel insurance – a cohort disproportionately reliant on passive coverage arrangements such as card-linked policies. The disclosure risk compounds the access risk. The Australian government’s Smartraveller service, citing research from Mozo, notes that only one in five Australians reads their full travel insurance policy before travelling, meaning that many cardholders who believe they hold coverage may be unaware their terms have already changed or that their activation pathway has narrowed.
The Australian Financial Complaints Authority (AFCA) received 34,231 general insurance complaints in 2024-25, a 17% increase from the prior year. AFCA’s published guidance confirms that for complimentary travel insurance provided through a credit card, complaints must generally be lodged against the underwriter rather than the card issuer, because the insurer provides the policy issued to the card provider. As coverage terms narrow and activation pathways close – whether through bank policy reductions or agents exiting credit card acceptance – disputes arising from coverage gaps that cardholders did not anticipate are likely to rise. Long summarised the trajectory: “You’ll see fewer points and less ability to claim benefits such as [travel] insurance.”
