Alliance Data Renews Air-Miles Deal With Canadian Bank

Alliance Data Systems Corp. today announced that Bank of Montreal has renewed an agreement with the Dallas-based transaction processor's loyalty business, the Air Miles Reward Program. The terms of the renewed contract have been revised and expanded, according to Alliance Data. The processor now becomes responsible for estimating the redemption rate and maintaining an adequate reserve for each Air Miles reward mile Bank of Montreal issues. The new structure eliminates the need for Bank of Montreal to maintain its own reserve for the redemptions. The bank and processor adjusted the pricing to reflect Alliance Data's responsibility for redemption. Bank of Montreal will pay Alliance Data approximately $370 million by the end of June to cover the cost of redemptions related to outstanding Air Miles reward miles Bank of Montreal issued under the previous arrangement and will increase the balance of the account to more than $650 million. Alliance Data's deferred revenue balance also will increase to nearly $1.2 billion from $800 million, according to the company. Bank of Montreal customers earn reward miles for purchases made with the issuer's Mosaik Air Miles MasterCard credit card and Bank of Montreal debit card.