EU rules targeting the interchange fee on premium credit cards have most rewards card lenders worried - everyone, except, maybe American Express (Amex). The new rules do not apply to all of Amex premium cards and even those that are impacted typically charge higher fees to the merchant to be accepted into the network in the first place. The charge card will often show up as a top pick for travellers and business people who want to have a rewards card that can offer a good network and a large variety of travel rewards, from worldwide comprehensive travel insurance to points for redeemable for gifts, travel, and entertainment. Will this card get an unfair advantage over other premium cards that will have to abide by a proposed cap on interchange fees thus limiting what they can offer? Initially, they may actually be one of the few 'safe' options out there, but that will surely change as they have to be as competitive with other lenders to keep operating a profitable business that attracts people to their credit offerings.

The answer could be 'yes'

If the proposal to limit the interchange fees applied to premium credit cards hit lenders, they will probably react by reducing the amount of rewards they offer on most cards. They may downgrade points or increase the amount of Avios necessary to collect a round-trip ticket. They might even decide to impose foreign transaction fees on those that currently do not do that to replace the lost fees. Either way, the money to support the rewards will have to come from somewhere or the lenders will have to revamp their programs. This could make the Amex cards, even though they are only charge and not credit cards more appealing to travellers still looking for generous travel reward cards as they aren't directly impacted by the new regulations. However, just because the new rules may not apply to them does not mean they won't be affected as other creditors take steps to comply with the capping of the interchange fee.

Or, it could be 'no'

However, don't believe that Amex is immune to what goes on in the marketplace. For one, if merchants are upset about paying interchange fees and instigated this regulation to reduce them, there's no guarantee they will continue to take Amex's higher fees to be on their network, too. They may just decide to leave the network entirely, thus reducing the number of places a consumer can use the Amex card when travelling. Even if they keep them in their network, Amex may be forced to reduce their fees to remain competitive in the marketplace as consumers seek online through credit cards comparison sites. They may even reason that if they don't do it now on a voluntary basis and in the manner that they want to see to happen, then the regulatory engine may target them next for financial reform. Thus, they may also end up having to reduce their rewards program in line with the type of fees the new market will support.

What about 'maybe'?

It's still possible that credit card issuers come up with a scheme of their own to save a lucrative rewards system from crumbling for lack of fees. The customers who get a variety of credit cards enjoy the air mile and point schemes and would be very unhappy to see them go. They also have served as a valuable incentive to promote spending in the economy, which helps to keep the economic engine humming and business strong in the credit card industry. Don't assume that premium rewards cards are going the way of the dinosaur just yet. For one thing, the top tier premium rewards cards will never go away and will always continue to offer rewards that distinguish them from regular credit cards. Maybe the annual fees will go up and maybe the rewards structure will change dramatically, but it's not likely they will want to eliminate a program that has been profitable for many years and highly popular with credit card holders. Even so, consumers who hold current rewards cards may want to think twice before closing accounts as there may end up being fewer good offers on the market later on, depending on whether the proposal passes or not.