Good morning. Americans love their loyalty points. Almost three-quarters of them use a credit card that lets them earn rewards. And the income generated from issuing those points is critically important to many players in the Fortune 500, especially airlines, hotels, and merchants. Delta Air Lines alone reported a 6% increase in loyalty revenue last year, with co-brand income from Amex up 11% to $8.2 billion.
U.S. companies are expected to issue or redeem about $26 billion in points for customers this year. That doesn’t include the hundreds of billions of dollars in uncashed points that keep people tethered to their loyalty programs, despite devaluations, or perks that are hard to redeem. Along with generating revenue, those programs generate data that lets companies recognize and engage their most valuable customers. That might soon change.
Get ready for a raft of legislation that could cut points and consumers’ ability to accrue them. Lawmakers have reintroduced the Credit Card Competition Act, which forces issuers to put two unaffiliated networks on each card, allowing merchants to pick the cheaper one at the point of sale. And last week a federal judge upheld an Illinois state law, the Interchange Fee Prohibition Act, which bans swipe fees on taxes and tips, which could lead to higher card fees and reduced rewards. Other states are also targeting so-called interchange fees.
