Source: Fortune
Summary
New legislation could impact the loyalty economy, threatening the revenue generated by credit card rewards programs. The Credit Card Competition Act and the Interchange Fee Prohibition Act aim to lower fees for merchants and customers, but may reduce rewards for consumers. Airlines and other companies that rely on points may need to adapt their business models. Brian Kelly, founder of The Points Guy, warns of an “existential crisis” in the rewards and credit card space.
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The numbers tell one story.
Delta Air Lines reported a 6% increase in loyalty revenue last year, with co-brand income from Amex up 11% to $8.2 billion. U.S. companies are expected to issue or redeem about $26 billion in points for customers this year. But new legislation could cut points and consumers’ ability to accrue them. Brian Kelly warns that retailers choosing cheaper networks could mean fewer points and fewer fraud protections for consumers.
The strategy enters a familiar phase: companies may need to get creative to retain customer loyalty.
Author: Evan Null
