New U.S. legislation could upend credit card loyalty programs: The Points Guy founder calls the reckoning un-American

Core Insights - Loyalty points are highly valued by consumers, with nearly 75% of Americans using credit cards that offer rewards, significantly impacting revenue for companies in sectors like airlines and hotels [1][2] - U.S. companies are projected to issue or redeem approximately $26 billion in loyalty points this year, alongside a substantial amount of uncashed points that keep customers engaged with loyalty programs [2] Legislative Changes - New legislation, including the reintroduction of the Credit Card Competition Act, could reduce the ability of consumers to accrue loyalty points by allowing merchants to choose cheaper transaction networks [3][5] - A recent ruling upheld the Illinois Interchange Fee Prohibition Act, which bans swipe fees on taxes and tips, potentially leading to increased card fees and diminished rewards for consumers [3][5] Impact on Business Models - The push for lower fees for merchants may threaten the loyalty economy, impacting the business models of airlines and other companies that rely heavily on loyalty points [4][5] - Industry experts warn that if retailers opt for networks with lower swipe fees, consumers may face fewer rewards and reduced fraud protections, which are often funded by these fees [5]