Westpac will market a variant of the American Express credit card to their consumer customers in Australia from this week, under an agreement between the bank and AmEx that is sure to infuriate MasterCard and Visa, and also hasten the interest of the Reserve Bank of Australia in the details of arrangements between banks generally and the "charge card" brands.On Friday, Westpac announced a series of changes to the reward programs that reduce the value of reward points overall. The changes to Westpac's credit card offer include:• A 50 per cent reduction in the conversion rate of reward points under the bank's "Altitude" card program, when those points are converted to airline frequent flyer points. That is, one reward point now converts to only half a frequent flyer point. This reduction applies to the new American Express credit card, as well as to MasterCard and Visa credit cards issued by Westpac. The reduction applies from 9 March 2004. • The maintenance of a one reward point for each dollar spent on AmEx, MasterCard and Visa, when those points are used to redeem shopping and travel vouchers or other rewards, such as rebates on fees on other Westpac products.• The introduction of an American Express credit card into the rewards program. The AmEx card will accrue two reward points for each dollar of spending, and to that extent maintain the one dollar of spending buys one airline frequent flyer point that used to be available under Westpac's Altitude rewards program.• The American Express card option will attract an annual fee of $45 per annum, which Westpac will waive for customers who take up the offer by the end of April 2004.The Westpac press release states that customers choosing the AmEx card option "will have it linked to their existing Altitude account seamlessly providing one statement, one points balance and one credit limit." This is open to a number of interpretations, which we'll follow up and report back on.Westpac's decision to issue an American Express credit card is no surprise, given the efforts by AmEx to attract Australian banks as issuers, and the Reserve Bank's regulation of the credit card sector, which cut interchange levels by about half from late 2003. Westpac's been an issuer of American Express branded corporate cards for about two years and was always a likely issuer of the AmEx card.National Australia Bank's also a contender to issue AmEx cards. The bank already does so in New Zealand under the Bank of New Zealand banner.American Express' success in winning over Westpac as an issuer may have deeper ramifications, however. For one, the wider market and the regulators will want to know the details of the financial arrangements. As with the agreement between ANZ Bank and Diners Club under which Diners issues an ANZ branded charge card, the assumption will be that there is some form of shadow interchange agreement between AmEx, as the acquirer of transactions from merchants, and Westpac.The regulated card brands will also use the decision