Most of the time, credit card points don’t avail you for your favorite purchases. When you are buying things online, there is usually a debit and credit card option, but not one to pay with credit card points. But American Express is looking to change that.
AmEx is planning to lay out a system that will let cardholders pay for purchases online with their rewards points using third-party digital wallets. If this kicks off, AmEx points could well become one of the most valued currencies on the market. We would start seeing credit card rewards in a totally different way.
The patent application will be used to give cardholders the option to use rewards online, but only if they are paying with a digital wallet or merchant partner. Digital wallets are systems, which consumers can use to make payments via their cell phones. Small businesses would process these credit card payments directly in the case of PayPal and other similar services.
It is not known if AmEx is interested in pushing the plan described above, but it has the potential to make their rewards a popular redemption choice. The digital wallet option wouldn’t require a traditional point-of-sale system, or any extra effort from the customer or merchant. Right now, multiple issuers let you pay with reward on Amazon.com and a few other online shopping portals. Moreover, there is the provision to redeem points and miles, which you earned on co-branded and proprietary cards directly with the merchants.
But the new concept also lets people with general purpose credit cards to utilize their points for purchases at any merchant accepting said cards. You would add items to the cart, click on the points payment option, and be asked if you want to use your membership points.
Like Discover, AmEx is both a card issuer and a payment network, which means there is less chance of a hitch presenting itself when you are making a payment. Only, it is not a sure bet that customers would be comfortable with paying this way. Rates would also vary with merchant, so you are not exactly guaranteed to get 1 cent per point for, say, merchandise, which devalues every point by half.
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