Sunday, December 10, 2006

Retailers Taken on Frequent Flyer Ride (*

Recent merchant interchange fee increases were linked to frequent flyer reward card programs. The rates were increased when cardholders used their affinity frequent flyer-linked cards.

However, if you are late paying a single monthly credit card bill, the card company can confiscate all your accumulated frequent flyer mileage accrued on your account

The question?

Even though merchants are paying more when honoring affinity reward cards, if the cardholder is forced to return all the mileage, does this mean that the business gets a refund too? Alter all, we paid a premium and if the cardholder is precluded from using those miles, shouldn't the retailers get a refund?

The inequity does not end with affinity cards. Just this past weekend, during a hotel visit, a credit was issued to our account for certain charges. a refund for the taxes were applied, but when merchants issue credits on a charge card, their are no interchange fee refunds.

Example: If a furniture store sells a $10,000 living room set and the customer returns it, the retailer is forced to still pay the interchange fee even though the items were returned. Forget "restocking" costs, how about interchange fee costs on returns, especially during the holiday season.