Rewards Cards Market Share
I began doing some research to figure out what share of credit cards are rewards cards. I found a few data sources:
- 40-45% of all credit cards are rewards cards, says an article at yahoo, quoting Jonathan Silver, chief executive of Affinity Solutions Inc., a New York company that develops and manages rewards programs
- Rewards cards will account for 93% of all credit cards within a few years – according to this research report from PackagedFacts.com
- First Annapolis, a consultancy focused on the credit card industry, reported in January 2007 that 70% of new cards are rewards, while 50% of total cards are rewards
The increasing popularity of rewards cards are an issue for businesses that accept credit cards because the cost of the rewards is passed on to the business in the form of higher interchange fees. The interchange rate for rewards cards is usually about 0.15% to 0.30% higher than for a comparable non-rewards credit card.
For many businesses, especially small ones, that do not have interchange plus pricing, however, the cost of rewards can be much larger. It is common in the credit card processing world for the processor to make a much higher profit on rewards cards and business cards by classifying them as “mid qualified” or “non qualified” transactions. Typically, a small business will face an additional 0.25% to 1.00% fee on top of the 0.15% to 0.30% higher interchange rate. The best way to avoid this additional markup is to have your credit card processing priced on an intechange-plus basis.
