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Flying High on Rewards

Airline CEOs are sounding the alarm against the bipartisan proposal that aims to save merchants on credit processing fees by forcing more competition in the credit card processing industry. Airlines have long benefited from reward programs, and claim that cards would no longer receive the funding to be able to invest in rewards programs. Visa and Mastercard dominate the processing payments system and collect billions each year from processing fees. These fees are either absorbed by merchants or passed on to consumers through higher prices.

Delta and United CEOs both warn that if legislation passes it will would kill rewards programs. Major banks that issue credit cards co-branded with airlines buy miles or points from the airlines to give to its cardholders and airlines are also paid each time the card is used which CEOs argue that with the new legislation these programs would not be viable for the airlines. Advocates for the bill argue processing fees result in higher prices for consumers. The bill faces an uphill battle with lobbyists on both sides fighting hard to convince lawmakers on how to vote. Republicans on the house committee have mostly resisted new regulations on banks, so we’ll just have to keep an eye to see how this turns out. For more industry news, follow us here. For business solutions to help you save and grow your business contact us today!

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