Big changes coming for card rewards

CUs may need to join merchants and product makers in rewards offered before purchasing decisions.

A sea change is coming in the card payments industry—and it will make current reward card programs obsolete in a few years, warns payments consultant Richard Crone, founder of Crone Consulting LLC, Santa Clara, California. Not revamping programs, he says, will be “a self-liquidating decision.”

The catalyst for change is a March 2024 settlement announcement in the long-simmering litigation war between the card brands and merchant groups over interchange. The settlement, pending likely court approval, will give merchants a four-basis-point cut in merchant processing fees for three years, a flat-line guarantee on interchange rates for five years and a seven-basis-point cut in fees below the current average, Crone explains.

These changes, Crone notes, favor merchants but are not a game changer for CUs.


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