Quote:
Originally Posted by JSLTIGER
using airline miles to reward credit card loyalty is not a transaction in a sense. In order for a true transaction to occur, something has to be given up on both sides. For a contract to be legal, at least a token amount must be traded to ensure that both parties entering the contract are being considered.
This is not the case when the credit card companies essentially give the miles for nothing but "loyalty."
http://en.wikipedia.org/wiki/Peppercorn_(legal)
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Just picking you up on an error in your logic. How do you think the credit card companies get the airline miles? Airlines do not "give" them to the credit card companies, they sell them to credit card companies for legal tender. Both parties giving up something. This is how airlines create value from these schemes otherwise they would have no incentive to set them up in the first place.
As to the credit card company customer, they are "given" the points as a "reward" for paying for things with the credit card. In reality they are "sold" to the customer at a rate that is covered by the merchant service fees and interest payments (both ultimately paid for by the customer). Seriously whether you realise it or not you are paying for every one of the "free" points you get when you use a card. It has simply been sold to you in a more palatable way.
Do you really think points and loyalty schemes are about loyalty? They are all about generating value from establishing an alternative currency which is traded between entities who most certainly both give something up when points are being transferred between them. |
