From 16 May 2024, Qantas Frequent Flyer members swiping an American Express Qantas Ultimate card at a government agency or utility provider saw their earn rate halved to 0.5 Qantas Points per A$1 spent. The revision, announced by Qantas on 17 April 2024, capped a two-year sequence of Amex earn cuts—the Qantas Discovery card had already been clipped to 0.5 points per dollar on government and utilities from 8 September 2023, down from 0.75—and arrived while the average merchant service fee for Amex transactions remained stuck at 1.5 per cent of transaction value, according to the Reserve Bank of Australia’s June 2023 Bulletin. At the same time the RBA’s Payments System Board Annual Report for August 2023 estimated that about 85 per cent of Australian merchant outlets now accept American Express, a substantial gain on the 73 per cent recorded in 2019 yet still leaving one in six checkout counters Amex‑free and countless more applying a surcharge that wipes out any miles advantage. For frequent flyers who have long offset 1–3 per cent surcharges with a 1–1.2 cent Qantas Point valuation, the maths no longer works without a deliberate supplementary‑card strategy. An Amex‑only wallet now bleeds value on every utility bill, insurance premium and corner‑store coffee that attracts a fee, making a low‑cost or no‑annual‑fee Visa or Mastercard an indispensable companion. This analysis maps the current acceptance and surcharge terrain, recasts the breakeven thresholds after the latest devaluations, and prescribes card pairings that keep net miles yield positive without paying a cent of avoidable surcharge.
Amex Acceptance in Australia: 85% and Stalling
The 85‑per‑cent acceptance figure published by the RBA in August 2023 masks wide variation by merchant size and channel. Large national chains, major supermarkets, department stores and fuel retailers almost universally accept Amex with no surcharge, because their merchant agreements typically package Amex with other schemes at blended rates that keep the effective cost low. Outside those big‑box settings, the experience fragments.
Physical vs Digital: The Convenience Divide
Online checkouts powered by Stripe, Shopify or eWAY routinely display Amex as an option; the payment gateways absorb scheme fees in their pricing. Brick‑and‑mortar small business is far patchier. The RBA’s 2022 Consumer Payments Survey reported that 39 per cent of consumers paid a surcharge on at least one credit card transaction in the past year, with Amex being the most surcharged scheme. Cafés, hair salons, medical practices and independent retailers that use older EFTPOS terminals or who are reluctant to absorb Amex’s higher wholesale fees often display a “1.5% surcharge for Amex” sign and sometimes refuse the card outright. QR‑code ordering systems integrated with Square or Tyro have expanded Amex acceptance, but many of those same merchants opt to pass the full merchant service fee through to the customer, creating a de facto tax on miles.
Surcharge‑Safe Categories vs High‑Risk Merchants
Frequent flyers can safely leave Amex as the default card at Coles, Woolworths, Bunnings, JB Hi‑Fi, major airlines and large hotel chains—all surcharge‑free for Amex and often bonus categories. The hazardous terrain includes local government rates, water and electricity retailers, private health insurers and independent automotive repairers. In those categories, a surcharge of 1.5 to 2.5 per cent is standard, and since the 2024 devaluations the points earned rarely compensate for it.
Why Some Outlets Still Say No to Amex
Despite the “no‑surcharge for Amex” push by American Express itself—the company has offered merchants simplified flat‑rate pricing and same‑day settlement via Square—the underlying wholesale fee for Amex cards remains higher than for domestic Visa and Mastercard transactions. The RBA Bulletin (June 2023) noted that Amex’s average merchant service fee was 1.5 per cent versus 0.7 per cent for Mastercard credit and 0.5 per cent for Visa credit. Under the RBA’s surcharging standard, merchants can only recover their cost of acceptance, which for Amex is frequently double the other schemes. For a low‑margin business, absorbing that gap is uneconomic. The result, visible in every suburban strip, is a printed list of surcharge percentages by card type.
The Surcharge Equation: When Points Become a Cost
Cost‑Based Surcharging and RBA’s Frown
In Australia, merchants are permitted to surcharge provided the amount does not exceed their cost of acceptance for that card scheme. The rule, codified by the RBA in 2016–17 and reinforced by ACCC enforcement, ties the surcharge ceiling to the merchant’s average blended merchant service fee for the relevant card type. For large merchants with negotiated rates, that often means zero surcharge for Visa and Mastercard credit and 0.5–1 per cent for Amex; for smaller merchants paying standard “simple” rates, the ceiling can be 2–3 per cent for Amex. The RBA is currently conducting a review of retail payments regulation that may tighten surcharge rules—particularly for debit cards—but no final change has been enacted as of mid‑2025. For now, the surcharge a frequent flyer sees at the point of sale is a real and recurring cost that must be netted against the value of points earned.
Post‑Devaluation Breakeven for Qantas Ultimate
Assigning a conservative value of 1.2 cents per Qantas Point to economy redemptions (consistent with OzFlyer’s internal yield model) gives clear breakeven surcharge thresholds. Before the 16 May 2024 changes, the Amex Qantas Ultimate card earned 1 Qantas Point per A$1 on all spend, yielding 1.2 cents per dollar. Any surcharge below 1.20 per cent made the card value‑positive; a typical 1.5 per cent surcharge cost 0.30 cents per dollar, which many members were willing to absorb for lounge passes and status credits. After the cut, the calculus splits:
- General spend (unchanged) still earns 1 point per dollar → breakeven surcharge 1.20%.
- Government and utility spend now earns 0.5 points per dollar → value 0.6 cents per dollar → breakeven surcharge 0.60%.
A $200 water bill incurred with a 1.8 per cent Amex surcharge costs $3.60 in fees and returns 100 Qantas Points valued at $1.20, a net loss of $2.40. The same transaction routed through a Visa card with a 0.5 per cent surcharge costs $1.00 and, depending on card, earns 50–100 points, turning the loss into a modest gain. The strategy pivot is unambiguous: Amex Qantas Ultimate should be used only where the merchant category guarantees 1 point per dollar without a surcharge above 1.20 per cent, or where the surcharge is zero and the category is not government/utilities.
The No‑Surcharge Loophole: Visa/Mastercard Debit and BPAY
Many Australian billers offer surcharge‑free payment via EFTPOS (scheme debit), BPAY or direct debit, entirely avoiding card fees. By linking a Bankwest Qantas Debit Mastercard (0.5 Qantas Points per A$1 on all purchases inside Australia with no annual fee) or a Virgin Money Global Wallet debit card to an everyday transaction account, a frequent flyer can earn points on spending that would otherwise attract a surcharge—at zero extra cost. Utilities and government agencies that do not accept Amex or that surcharge it heavily can be paid via BPAY from a credit card using a service like Sniip, which charges a 1.5 per cent fee but earns full points on eligible Visa/Mastercard credit cards. This opens an intermediate option: a Qantas Premier Everyday Visa used with Sniip to pay an ATO bill at a 1.5 per cent fee still justifies itself if the card earns at least 1 Qantas Point per dollar (value 1.2 cents), leaving a 0.3 cent shortfall that may be tolerable.
Building the Dual‑Card Wallet: Qantas and Velocity Points Maximisers
A supplementary card should be selected to minimise the total annual fee burden while maximising earn on transactions that Amex treats poorly. The pairings below are optimised for Qantas Frequent Flyer and Velocity Frequent Flyer, with actual earn rates and fees drawn from issuer websites as of June 2025.
Qantas Ultimate + Qantas Premier Everyday Visa
- American Express Qantas Ultimate: annual fee $450, but includes a $450 Qantas Travel Credit when booked through Amex Travel, effectively zeroing the fee for those who can use the credit. Earn: 1 Qantas Point per A$1 on general spend; 0.5 points per $1 on government and utilities (since 16 May 2024); 2 points per $1 on Qantas products. Breakeven surcharge 1.20% (general), 0.60% (government/utilities). No foreign transaction fees.
- Qantas Premier Everyday Visa: annual fee $0. Earn 0.5 Qantas Points per A$1 on all eligible domestic spend and 1 point per $1 on international spend. No foreign transaction fees. Typical surcharge 0.5–1.0 per cent at small merchants. Breakeven surcharge 0.60% (domestic) and 1.20% (international) using 1.2c point valuation.
Usage rule: Keep Amex Qantas Ultimate as the default for large retailers, dining where surcharge is absent and Qantas bookings. At any terminal that displays a surcharge above the breakeven figure for that spend category—or at any government/utility merchant—switch to the Qantas Premier Everyday Visa. If the Visa also incurs a surcharge above 0.60 per cent, use a no‑surcharge debit card or BPAY. The dual‑card combination costs $0 net annual fee after the travel credit and earns 0.5–1 Qantas Point per dollar across virtually all spend.
Amex Membership Rewards + Citi Premier and KrisFlyer Transfers
For flyers who prefer Singapore Airlines KrisFlyer or other transfer partners, the Amex Membership