Originally Posted by itsme
If the customer is going to get 20,000 miles as a by-product of his purchase of the goods or services, what is merchant/broker/whoever paying the airline for those miles? Anyone have any knowledge of that part of the deal that we as customers don't see?
Generally, the merchant will pay the airline somewhere between $0.01 and $0.025 per mile. Big purchasers (Citi, Amex, etc) toward the low end and small businesses toward the high end. The exact price paid by merchants like Citi are closely guarded secrets while the high end is usually disclosed publicly by the airlines (often on their websites). AA, for example, will sell 250k miles for a total of $6,162.50:
https://www.orderaamiles.com/orderAAmiles/pricing.jsp