[a2kadet]

I'm pretty sure loyalty programs are good for the smart consumer. I would speculate credit cards were all competing with one another while charging a 2% fee. They all wanted to go lower but couldn't and needed something to compete. Enter loyalty programs, designed to attract your attention but be too confusing to actually use.

TL,DR - I would guess cutting loyalty programs wouldn't lower credit card fees.

[dangrossman]

The interchange rate charged by the card network (Visa, MasterCard, etc) is determined by the type of card presented. Rewards cards are charged a higher fee because they're reward cards (the rate is literally called "CPS Rewards"), and that extra money ends up back with the card-issuing bank who's paying the rewards. If you head into your local convenience store and pay with a cash-back card, that store will lose a larger percentage of your transaction than if you had handed the very same cashier a basic non-rewards card.

http://usa.visa.com/download/merchants/visa-usa-interchange-...