Credit card surcharge, cash discounting and affiliate programs for FFPs: warning, link fu ahead

[walkitout]

This will be edited. Probably.

So, I'm sitting here thinking, you know, you didn't used to be able to offer a discount to induce the customer to pay using other than a credit card ("5% discount for cash!"), but there was a settlement and now the Visa/MC/etc. folks have had to give in and you _can_ charge a surcharge and/or offer a discount for some payment methods, subject to local (state) law.

Yeah.

Okay, so here's where I'm going with this. A _major_ income stream for some airlines (bigger than anything else, apparently) is when they make a deal with an affiliated credit card so that using the credit cards gets miles. The credit card takes part of what they charge merchants and uses it to buy miles from the airline and disburse them to the customer who may or may not ever get around to figuring out a way to use those miles to do whatever it is you do with miles in a FFP. MAJOR income stream. I ask myself, Self, in a world in which merchants can push customers away from credit cards to debit cards, and a world in which millenials are inclined to spend that way anyway, what are the future implications for this airline income stream?

Step 1. Is my recollection about the rule change accurate. Yes!

http://usa.visa.com/personal/get-help/checkout-fees.jsp

Altho if you look at the Massachusetts rules, charging a surcharge to use credit card is ILLEGAL but you CAN discount for cash. I know, right? Kinda makes your head swim, altho this piece of ridiculousness has nothing on all those state laws setting pi = 3 that history is littered with.

Step 2. Any indication that there is an impact on affiliated cards? I tried this (without quotes):

impact credit card surcharge on airline affiliate cards

And got a bunch of helpful sites (joke) plugging airline affiliated cards. All have $95 annual fees (really? really?) and apparently the scams never end.

A sample: http://www.mrmoneymustache.com/credit-cards/
Another sample: http://boingboing.net/2015/01/13/credit-card-hacking-for-the-sa.html

That second one is really kind of horrifying. I really feel like anyone who is that motivated (opening a new affiliate card annually to avoid paying the annual fee on the second year, if he is to be believed) should maybe go direct that entrepreneurial orientation to something more productive than gaming the fuck out of loyalty programs. Because I'm pretty sure he is the _opposite_ of loyal to any of these programs.

This does not help me. Altho I will note that FFP programs are generally moving away from a mileage orientation and towards a complex metric for assigning awards and tiers and crap that factors money spend on tickets more than miles flown (about freaking time, however, I'm sure people will game the new system as vigorously as the old one).

A bunch of these cards offer auxiliary benefits like, no foreign transaction fee (I'll tell you how to avoid that: prepay the big stuff and pay in cash for the rest. The only time we visited an ATM was when R. wanted to see if his no-fee international feature on his debit card actually worked. Seriously. We don't get out much?).

Clearly, I need a new search string, but I think I'm going to have inbound children in a moment.

ETA: A little old, but interesting:

http://www.creditcards.com/credit-card-news/credit-card-surcharges-allowed-1281.php

Expect surcharges in "noncompetitive sectors" first, apparently?

"Cash customers are providing miles and other rewards to credit card customers, and that is wrong," Edmund Mierzwinski, consumer program director at U.S. Public Interest Research Group, said via email.

ETA: Maybe not!

http://www.dallasnews.com/investigations/watchdog/20140920-watchdog-its-illegal-to-add-fees-to-credit-and-debit-cards.ece

Completely illegal fees are being charged on things like c-store purchase of a bagel. Texas enforcement is lax.

Comments

[ethelmay.livejournal.com]

I remember my dad going to a gas station in a little town in Wisconsin once that was advertising 5% discount for cash. He got asked for the regular price, said "But I'm paying cash," and was told, "Well, if you would have paid with a credit card it would have been five percent more." Dad's eyes bugged out and he roared, "That's not a discount! That's a surcharge!"

Of course the difference was maybe a buck or two, but it was the principle of the thing.

What a great story!

[walkitout]

I feel like that is _exactly_ the kind of story that says a lot about a person. I have a hard time imagining myself doing that, but you never know!

Re: What a great story!

[ethelmay.livejournal.com]

If I ever wanted to act like that, I would undoubtedly forget what the opposite of "discount" was in the heat of the moment. In fact I am pretty sure there have been times I wanted to tell this story and have been prevented because I couldn't remember the word "surcharge." Nominal aphasia is weird.