Will Online Transactions Become So Cheap They Destroy Credit Card Rewards?

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About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Sorry, New York, Montreal bagels are better. Probably because they can have wood fires. NY is good, really good, but Montreal is the best.

  2. Note to Kelly Dee…after 6 hours on hold…

    They are “working hard” to take care of their customers.

    Working hard…as opposed to….not working hard? Not working at all.

    It’s a shame, really.

  3. Bitcoin is the province of KYC and AML avoiders. They don’t care what a transaction costs, as long as it’s cheaper than the prevailing vig.

  4. Really, the ETH founder thinks 5 cents per transaction is possible? The average gas fee for an Etherium transaction in late December was $23.24.

  5. And yet, large banks can only charge $0.21 and 0.05% for a PIN debit transaction. I doubt they are losing money. Even if the cost of Ethereum was $0.05 per transaction, I doubt it is significantly less expensive than a traditional debit transaction. And, Ethereum is not really a competitor to credit cards, given the different nature of credit vs debit. Will businesses really drop their prices if they don’t have to pay credit card interchange fees? The biggest threat to credit cards is high interest rates, as rewards only really are possible in a low-inflation/low interest environment. If interest rates ever went back to Carter era rates of 12%, it would be hard to pay rewards to people who pay in full each month.

  6. WestJet just canceled my flight for tomorrow, rescheduled me for Wednesday. No option to rebook online on an early flight tomorrow. Gave me the option to schedule a telephone callback for FRIDAY! Is that a joke? Canceled and rebooked on Delta. Fingers crossed.

  7. Even before COVID, all companies implemented the big customer service lie. They cut CS staffing. Then the recording stated we are experiencing higher than normal call volume . . . even at 2am. They are not. They are experiencing the same call volume they always have experienced. Now, they are playing on the zeitgeist to garner understanding from customers. And, given the zeitgeist, they are emboldened to cut even further. It’s like making you use a kiosk to check in — reduce personnel expense. It’s like one gate agent — reduce personnel expense. Delta was particularly crippled by COVID. But, they are all playing the game.

  8. The difference in fee between Debit and Credit cards is attributable to rewards but also partly due to the cost of lending customers money with credit cards vs customers using their own money. Of the 1.2%-2.2% interchange fee for visa/MC, the issuing bank takes 80%. 2% cards are not the norm. Most cards are 1x and have bonus categories. Banks can do ok due to breakage for those who are ignorant of points and those who redeem for less than 1c (merchandise or Amazon/grubhub pay with points). Banks bought tons of miles at a discount for transfers. Banks on average are using a percentage of the interchange fee to cover their lending costs.

    Interchange fees can go down but something has to give with credit cards as more and more people don’t pay a penny of interest. Issuing banks will have to limit who they give credit to ala capital one to stay profitable even if they cut out rewards.

    The reality is consumers will not save a penny with capped fees via legislation or crypto networks taking over because businesses will not lower their prices. Some small businesses charge cc fee but bigger retailers like supermarkets don’t. Those supermarkets won’t pass on the savings. Prices are sticky. It just won’t happen.

    Given that rewards can go the way of debit card rewards, make most of the opportunity now. Europe already lives that way and the median household income of $31,000 in Germany/U.K/France vs $62,000 U.S. reflects what happens with overregulation and restrictions. Credit does not flow in europe like it does in the states.

  9. Bagels are an aquired taste.
    I never acquired it.
    Just give me a plain donut thanks!

  10. Going to miss Holly Hegeman and PBB. She did a great job – and was able to land those “get” interviews with many of those in the “C” suite.

    Very insightful and consistent reporting for many years.
    Here’s to hoping her health improves. Too bad nobody can “slip in” to her shoes and take over.


  11. Data point on PM member: got through to delta on platinum line in < 20 minutes and they called me back so didn't have to wait on hold. Got through on I message after 12 minutes but they were very slow and the phone rep took care of me before she could

  12. As someone who is paying PayPal 49 cents + 3.49% for every transaction, I welcome our new Bitcoin overlords. Now if they can actually make it come true…

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