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(i) unregulated Companion Card arrangements; and (ii) regulated four-party schemes. A Companion Card is linked to two different credit card networks, thus allowing the customer to earn the benefits of whichever one they choose to use at the purchase point. Traditionally, the core component of the American Express value proposition has been its membership rewards program, but merchant acceptance is relatively limited, especially compared with Visa and MasterCard. Using an American Express card also may carry a surcharge at certain merchants in Australia that are trying to make up for the higher interchange fee associated with processing Amex cards. Companion cards give customers the ability to make the most of the attached rewards program but with only the hassle of maintaining one account and one annual fee. Over the last few years, more and more banks in Australia have started to embrace the companion-card concept as its sole premium rewards card offerings. In fact, all four of Australia’s big banks, including Commonwealth Bank, ANZ, Westpac Bank and National Australia Bank, offer at least two different companion card accounts as part of its premium card accounts. "Increased issuance of American Express companion cards Although the three-party schemes have not been directly affected by the RBA’s interchange fee reforms, they have nonetheless sought new ways to compete in the evolving credit card market. As discussed above, the three-party schemes have traditionally issued their own cards, but they have also entered into commercial arrangements with selected issuers to offer companion three-party cards as part of a package with cardholders’ primary MasterCard/Visa cards. There has been increased promotion of American Express companion cards since late 2009, following the introduction of these cards by two major banks. Over time, credit card products with Companion Cards attached have increasingly replaced traditional single-card Rewards Programs in the product lines of all major banks. Under these arrangements, cardholders typically earn more reward points for spending on the American Express card than for spending on the MasterCard or Visa card. Cardholders pay no additional annual fee for the companion card and have a single account recording transactions for both cards. While there are no interchange fees in the three-party schemes, there are nonetheless commercial arrangements in place that give financial institutions an incentive to issue companion cards. In addition, three-party scheme cards tend to be more expensive for merchants to accept; these schemes can use their merchant service fee income to fund more generous rewards programs to attract cardholders.11"
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