A Love/Hate Relationship

  Over the years I have found the relationship between merchants and the card associations to be an interesting one. While retailers increasingly are crying foul over the rising cost to accept payment cards, many view plastic as a means to bring more customers into their stores.
  This notion again came to mind when AmSouth Bancorp announced in July an intriguing debit card rewards initiative. In the program, AmSouth is offering cash-back incentives to its debit cardholders when they shop at participating merchant locations. Some 50 merchants, either through their Web sites or at in-store locations, are participating, and some are household names.
  Among those supporting the program from their Web site include PetSmart.com, AceHardware.com, HomeDepot.com and BestBuy.com. In-store participants include Albertsons supermarkets, Virgin Megastores, Rite Aid drug stores and Toys "R" Us.
  The cash-back discounts AmSouth check card holders earn when shopping at the participating locations range from 1% of the sale at Albertsons to up to 30% for movie tickets. Some other specific cash-back rates include AceHardware.com, 4% of the purchase amount; SharperImage.com, 9%; 1800Flowers.com, 9%; and Sears.com, 2%.
  While AmSouth would not say whether the merchants are footing the bill for the cash-back awards, experts tend to believe they are, or at least a good chunk of it, because debit card programs do not to generate sufficient revenue to support such sizable reward offerings on their own.
  While the merchants' gripe over interchange, which represents about 90% of the discount rate, may not be unfounded, I find it ironic that some merchants upset with payment costs would pay double the discount rate or more per sale in cash back to customers as a tool to generate more transactions, and income.
  Meanwhile, on a different topic, please note that SourceMedia's Chicago office, where the Cards&Payments editorial staff is located, has moved. We are now located at 550 W. Van Buren, Suite 1110, Chicago, IL 60607. All Chicago SourceMedia employees still have the same phone numbers they had at the previous location on Wacker Drive in Chicago, and no e-mail addresses have changed.
  Also, at the request of the U.S. Postal Service, C&P as of this issue is reverting back to the same Volume and Number scheme used by the publication's predecessor, Credit Card Management. Sorry librarians, but it looks like C&P Vol. 1 No. 1 is now a collectors' item.
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