Question -- why does Chase Credit Card not give $1 credit for Amazon purchases

[Darrell KSR]

I have two credit cards that sometimes have a "5% back" feature. For example, through March 31, Chase Bank will give me 5% back on gas station purchases and internet service provider/cable purchases, up to $1500. So it's potentially a $75 benefit this quarter.

I just redeemed $112.09 I had just with a credit to my statement. Or maybe a deposit, don't remember. Anyway, cash. But if I use it to purchase things on Amazon, where my card is already listed, they only give like 80% credit....in other words, I only can use it for $89.67 in purchases. (I may have the exact dollar amount wrong, but that's very close).

Why would they do that? I can require them to give me cash money of $112.09, but if I use it to pay Amazon, I have to take a 20% hit. Why?

FWIW, Discover also has the 5% back at certain times, and it's also on Amazon. They give dollar for dollar credit for Amazon purchases, so if I have $112.09 for Discover, I can purchase that much on Amazon.

Not a big deal--I could always credit the $112.09 against Chase, then use the Chase card to purchase Amazon stuff if I was dead set on doing that, but just seems odd to me, and was wondering if anyone knew why they did this. FWIW, they allow dollar for dollar credit for gift cards and other purchases, although really, I've only done statement credits or deposits and Amazon for these things, as those are the cleanest.

[KSRBEvans]

From my experience Chase customer service is the Devil, so I'm going with that answer until proven otherwise.

[CitizenBBN]

Probably B/c Amazon has negotiated a better deal.

most if not all of the "cash back" and "points" money comes out of the retailer's side, not from the card companies. They raise the interchange rate on those cards so the merchant is basically giving you the money or points back, not the card company and usually not even the issuing bank, at least not much of it.

Now that's just background, b/c you've built up the "cash reward" to then spend, but my bet is the spending of that reward by some companies is ALSO done at a higher interchange rate,and Amazon simply has enough power to refuse to take those deals at least with some cards and some terms.

Just a swag, but Amazon is big enough for that kind of thing to happen IMO.

[Darrell KSR]

Discover may have more clout than Chase does to get their customers 100 cents on the dollar for their reward points.

Just seems silly. I almost made the mistake once. I saw how many "points" I had with Chase, was buying something on Amazon, and almost used my points. Then happened to glance and saw the dollars were different.

[Catfan73]

I think Citizen nailed it. Chase won't be losing any money but Amazon probably operates on volume with small margins.