Let me answer your question.
First of all, you implied that my research is financed by Visa. I announced that, and it's certainly the case. But like loyalty programs, professors have brand names. I say what I believe. If the message is consistent and Visa wants to subsidize it, that's clear. But I believe in 100% transparency, and I told you that.
Second, on loyalty programs, what I said was that as an economist I wouldn't know how to design a loyalty program. But I know that they exist in many different industries and they're there.
Now your key question was, who pays? The interesting thing is you assume. Clearly, when people look at costs with credit cards...and one of the reasons why credit cards are more costly is because it costs something to bring those customers in, and the way you bring the customers in is you give them these points and loyalty programs. But the other part of the equation, when you look at the system, is the efficiency gained by bringing them in. When I take my card and I get 2% cash back at the pumps, what I find is that I can do that transaction, and for the merchant, it's much cheaper. I don't have to line up and pay cash. The merchant doesn't have to add cash. So it's more efficient.
The second thing is this. I recently bought an Air Canada ticket with my credit card for a year from now. Now, without the credit card, I wouldn't have done it. Why? Even I wouldn't have paid cash, because I'm worried that Air Canada won't be here a year from now. They may be bankrupt. But with my credit card and with that premium credit card, what they give me is insurance. They give me insurance that if Air Canada goes under, and they can't default—