Banks pull down the shutters on Virgin Australia's Velocity scheme

Every bank and credit card issuer across Australia has locked out Virgin Australia’s embattled Velocity Frequent Flyer program, with cardholders unable to convert their existing credit card points into Velocity Points, or to apply for new credit cards directly attached to the Velocity program.

Some issuers including American Express, ANZ, NAB and Westpac acted swiftly to halt points transfers to Velocity last month when its parent airline went into administration, with similar action now taken by Citibank, the Commonwealth Bank, Diners Club and Suncorp.

New applications for all ‘direct-earning’ Velocity Frequent Flyer credit cards have also been suspended right across Australia, recognising that Velocity is currently blocking its members from spending their points in any way until at least May 19 2020.

The Velocity scheme has come under scrutiny in recent weeks, and not only because its parent airline remains in administrative limbo as up to 20 possible buyers run their eyes over the business.

It was recently revealed that Velocity Rewards extended a $150m loan to Virgin Australia in 2014 – a loan which remained unpaid when the airline went into administration – and is now among the 10,200 creditors to whom almost $7bn is owed, with the prospect of debt recovery being cents in the dollar.

However, Virgin administrator Vaughan Strawbridge of Deloitte has ruled out selling off the program "as an individual asset" and intends it to be a key part of the Virgin Mk II package offered to the airline's new owner.

CBA, Citibank, Diners Club, Suncorp put Velocity Points on hiatus

Members of the Commonwealth Awards, Citibank Rewards, Diners Club Rewards and Suncorp Rewards programs – as well as the Citibank-backed Card Services Rewards scheme attached to several white-label cards – can no longer convert their credit card points to Velocity.

In a statement published by Velocity Frequent Flyer, the program acknowledges that Commonwealth Bank, Citibank, and other credit card issuers have “made the decision to temporarily suspend the ability to transfer points to Velocity.”

“We look forward to bringing this option back as soon as we can,” Velocity adds, suggesting this is a temporary restriction likely to be reversed when Velocity members can once again spend their points.

Credit card users with cards attached to a bank-operated loyalty program can continue to earn points in that program as normal – subject to their card’s regular earning rates and policies – and may be able to convert those points to Velocity in the future, provided that ability is restored.

Points which have already been converted across to Velocity Frequent Flyer will remain in the member’s Velocity account, ready to spend when the program unfreezes its members’ points.

Also read: AMEX, ANZ, NAB suspend Velocity points transfers

AMEX, Virgin Money pause Velocity credit card sign-ups

While many card issuers – American Express included – allow credit card holders to convert points over to Velocity, some credit cards are instead directly linked to the Velocity Frequent Flyer program, with any points earned automatically credited to Velocity every month.

With Velocity Points currently unusable, both American Express and Virgin Money have stopped accepting new applications for such ‘direct earn’ Velocity cards for the time being.

At AMEX, this means the American Express Velocity Platinum Card and the AMEX Velocity Escape Card are no longer available to new customers. Existing cardholders can continue to use these cards as normal and earn Velocity Points: those points will simply remain locked in Velocity until redemptions are restored.

“As a long-term partner of Virgin Australia, we are deeply saddened to see one of Australia’s most valued brands enter voluntary administration,” American Express recently communicated to its Velocity credit card customers.

“We remain committed to working with our partners to ensure the impact to our mutual customers is minimised. As the situation continues to develop, we’ll be in touch to make certain you have the latest updates on your Card.”

Similarly, Virgin Money has closed both its Virgin Australia Velocity High Flyer Card and the Virgin Australia Velocity Flyer Card from new applicants, with existing cardholders still earning points as usual straight into their Velocity account.

This pause on applications will remain in place “until further notice”, Virgin Money confirms.

“We are working closely with Velocity to bring back these seriously rewarding credit cards as soon as we can.”

Another issuer of co-branded and direct-earning Velocity credit cards, Westpac, had previously suspended sign-ups for its ‘Altitude Velocity’ Platinum and Black credit cards, as well as the conversion of points from Altitude Rewards to Velocity for Altitude Rewards members.

However, Westpac cardholders on the ‘Altitude Velocity’ rewards path will continue to earn Velocity Points at their usual rates – with the same restriction that Velocity Points cannot be spent until the pause has ended.

Some credit card auto-conversions continue

In some bank-operated loyalty programs, customers have been able to ask for their bank-issued points to be automatically converted into Velocity Points every month.

For instance, this is possible in the Amplify Rewards loyalty program as comes attached to participating Bank of Melbourne, BankSA and St.George credit cards.

Velocity Frequent Flyer confirms that Amplify Rewards customers who were opted-in to ‘Velocity Auto-Redemption’ before the Velocity program was paused will continue to have their credit card points converted across to Velocity each month.

Cardholders who wish to stop this process and keep their credit card points in the Amplify program will need to call their issuing bank on the following numbers: 1300 600 266 (Bank of Melbourne), 1300 490 641 (BankSA), 1300 489 586 (St.George).

While manual points conversions from all Australian banks have now stopped, Flybuys points can still be converted into Velocity Points – but until Velocity Points can once again be spent, these Flybuys points would retain more flexibility in your Flybuys account.

Also read: AMEX serves up double points, extends travel credits

Chris C.

Chris is a a former contributor to Executive Traveller.