Millions of retailers pay higher merchant credit card fees when customers specifically charge using their affinity, frequent flyer award cards. This means that card-holding travelers and retailers are equally engaged in a fierce battle again the card issuers.
USA Today (May 31) reported that frequent flyers are turning a "skeptical eye to the skies." These loyalty programs are an all-around hidden tax that keeps on rising. Now, the airlines, like the credit card companies are facing growing customer unrest. While businesses are forced to pay higher merchant interchange fees for affinity cards, many do not even know they are also being taken on a ride when customers cash in their awards.
While many travelers are satisfied with the frequent-flyer awards, "Rolfe Shellenberger, now a retired corporate travel consultant in Palm Desert, Calif., understands frequent-flier programs from the inside out." As reported in USA Today, "The former marketing executive who designed the industry's first frequent-flier program at American Airlines, complains that airline managers now view them as profit centers rather than a means to promote brand loyalty ... [and] their purpose now is to generate more revenue."
Consumers pay twice. Once from the increased hidden tax paid to retailers and then again when they try to redeem the award mileage, as most are unused.
Since April 2005, Visa® and MasterCard® charge merchants a premium when their customers use these loyalty cards. This is just one of the nearly one-hundred separate merchant interchange fees. The value of the affinity accounts are cemented in a growing pool of waste. We read in the USA Today article that, "[t]heir accounts are brimming with 14.2 trillionmileage points, up from 6.6 trillion at the end of 2000, estimates Randy Petersen, publisher of InsideFlyer magazine and WebFlyer.com. Frequent fliers earned 2.7 trillion credits in 2005 alone."
[source: WayTooHigh.com with reference to USA Today (May 31)]
