What do corporations pay for miles?
 

I am pretty sure it can differ significantly from vendor to vendor. I wonder what Firstusa and Amex are actually shelling out per mile. What about idine?

Anyone know?

The various estimates that have been given in past threads have varied from 0.9 cents for very large purchasers to 1.5 cents for significant but less large purchasers.

I'd have to guess it's a lot less. My wife pays 1.65% + 10 cents a transaction for Visa and MC transactions for her small business. Guessing that larger companies with significant CC transactions pay less than that, it wouldn't leave much for the credit card companies.

What your wife pays for merchant fees and what the credit card companies pay for millions of miles are two completely different things. Sure, the spread doesn't look too great, but the card companies do a LOT of volume. They charge interest, late fees, etc. and they collect all sorts of annual fees for mileage-earning cards. That's where the real money is for them.

We purchase what would be called a very low amount of miles compared to credit card compaines and the rest, and we pay on the high end of that scale, about 1.3 to 1.5 cents per mile. I believe it's based on how much we spend with them during the year, not sure if that includes the Gift Certificates for flights or not.

There have been numerous threads on this topic over the years, and no one has ever posted exactly what the large companies pay for miles.

In this thread, milesrus asserted that in 2001, Citibank paid AA $678 million for miles. http://www.flyertalk.com/forum/eek.gif

At one cent each, that would be 68 billion miles. http://www.flyertalk.com/forum/eek.gif

No matter how you slice it, that's an awful lot of money for miles that will eventually be redeemed for capacity-controlled award seats and upgrades. http://www.flyertalk.com/forum/smile.gif

Although some airline employees still don't understand the economics of mileage programs, it is clear that award seats are not always "free." AA, along with Citi and other partners are actually selling the award seats a mile at a time to millions of customers.

The FF arem of airlines has been the ONLY part making money in the last year or two I recall reading. http://www.flyertalk.com/forum/smile.gif

Randy gave a potential "break up" figure for MP if UA went under, and it was based on what AC sold of a slice for. It ran IIRC way into the BILLIONS - just for MP.