Shoppers Love Rewards Credit Cards, but Retailers Are Not Big Fans - ABI

While consumers have become addicted to credit cards with generous rewards programs, retailers are trying to cut them off, the Wall Street Journal reported. Large merchants including Inc., Target Corp. and Home Depot Inc. are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants. They are likely to opt out of a roughly $6.2 billion settlement Visa Inc., Mastercard Inc. and several large banks recently reached with merchants and continue to make their case in court. The retailers are trying to end the card networks’ “honor all cards” rule, which requires merchants that accept Visa- or Mastercard-branded credit cards to take all of them. If merchants could pick and choose among Visa or Mastercard credit cards, those with the highest merchant fees — and most generous rewards — likely would be on the chopping block. Ultimately, though, the retailers are looking for bargaining power that could help them lower fees across the board. Rewards credit cards such as JPMorgan Chase & Co.’s Sapphire Reserve, Capital One Financial Corp’s Venture and Citigroup Inc.’s Double Cash are wildly popular among consumers for their perks like cash back, airfare and hotel stays. Some 92 percent of all U.S. credit-card purchase volume is currently charged on rewards credit cards, up from 86 percent in 2013 and 67 percent in 2008, according to estimates from Mercator Advisory Group Inc., a payments research and consulting firm.

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