Forty to 70 percent of transactions, depending on the region, are made with rewards cards, according to Phil Hinke, founder and president of MerchantFeeSavers, a company that helps small business owners understand processing fees. However, it turns out that it costs a merchant more each time a consumer pays with a rewards card than when a consumer pay with a basic credit card. And that hurts the bottom line of retailers, because reward cards make up the bulk of credit card transactions.
So that small mom-and-pop retailer doesn’t have much love for your rewards card because they are footing the bill for those free airline tickets and other perks. The “small business owner is paying more — not only to use a rewards card — but just to use plastic in general,” and they may actually be getting a worse rate than larger companies.
Rewards cards holders are a valuable group of spenders though, so retailers have the option of trying to steer customers to other forms of payment, or they can be happy the rewards card user is most likely also spending more money.