Re:Anatomy of a credit card rewards program
by Dylan16807 on Saturday April 06, 2024 @01:06AM
(#39950135)
Your math for scenario B doesn't work.
If the average over all transactions was 1%, then the cash customers must have greatly outnumbered the 2-5% reward customers. In that case, the majority of consumers aren't losing. The majority benefits or sees no change.
If a majority of customers were in the 2-5% range, then the new prices must be more than 1% cheaper, maybe even 2% cheaper. So now all the cash customers and the 1% customers benefit. And the 2% customers might see no difference.
If the average over all transactions was 1%, then the cash customers must have greatly outnumbered the 2-5% reward customers. In that case, the majority of consumers aren't losing. The majority benefits or sees no change.
If a majority of customers were in the 2-5% range, then the new prices must be more than 1% cheaper, maybe even 2% cheaper. So now all the cash customers and the 1% customers benefit. And the 2% customers might see no difference.