A day off for interchange's Hatfields and McCoys?

The interchange wars between merchants and payments companies came to a temporary ceasefire Wednesday at the annual Cards & Payments Loyalty Conference in New York.

Representatives from both sides of the debate spoke at the conference about their loyalty programs, which can bring in significant business for both merchants and credit card issuers.

Some attendees acknowledged the event’s inherent tensions. “Retailers don’t like interchange fees – shocker,” Andrew Pyper, the senior director of loyalty and credit marketing for Saks Fifth Avenue, told the audience, to some pained laughter. “So we want to encourage spending on our store cards.”

Interchange fees fund many card rewards programs, and the banking industry has long claimed that interchange regulation would sharply restrict its ability to offer such programs. So for an issuer like JPMorgan Chase & Co., which in June unveiled a new “Ultimate Rewards” program, what executives call government “intervention” would be highly unwelcome.

“Having been in this business for 20 years or so, the specter of interchange legislation has always been out there. What you need to do as an issuer is create the best loyalty program you can while all of us prepare for those contingencies,” Rob Rosenblatt, JPMorgan Chase’s general manager of customer loyalty and innovation, said in an interview at the conference, which was sponsored by American Banker’s parent, SourceMedia Inc.

But JPMorgan Chase did not let that specter influence the way it developed its new rewards offering, Rosenblatt said.  “Programs need to react to the times,” he said. “We’re not anticipating a change. You need to run your business based on current business conditions, so that the program is designed for today.  And there are other key portions of the Chase card business that deal with those [interchange] issues on an ongoing basis, and we’ll see where it takes us.”