Where card rewards come from
The loop that funds your Airpoints.
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Merchant pays the interchange fee
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That fee funds card rewards — Airpoints, cashback
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credit_card
Rewards go to premium cardholders
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the loop closes
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Customers paying with a basic debit card pay the
same higher prices
— but earn
no rewards
.
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costs recovered
savings
Basic cardholders quietly subsidise premium rewards
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groups
All customers pay higher shelf prices
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Merchant raises prices to cover the fees