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Title says it all.
For example the Amazon.com Chase card gives 3 points/dollar for Amazon purchases, 2 for gas station and dining purchases, and 1 point for everything else. It's obvious that money spent at Amazon is 'more valuable' to Amazon.com (direct profit/dollar, vs. the value of general expenses on the credit card being derived from the risk of carrying a balance month-to-month)
These two categories ensure you will carry the card in your wallet (since they only work for physical locations), but don't tend to have excessive spending (most people maxing out at $200 or so per month, so $2 for the bonus). You then use the same card for other purchases, because you have it on you, where you only get the 1%.
It worked for me, I started carrying the Amazon card when I found out it had a higher percentage for gas purchases. I only use it for gas though.
Don't really know but I can guess. Firstly, everyone thinks the price of gas is too high. You drive to work every day, and gas is basically the only product who's price is advertised from the street! From that perspective. So mentally, I argue, we overvalue an extra 1 percent discount on gas. It's only worth maybe 60 cents a month to me, but worth a lot of other interchance fees for the credit card company.
Secondly, gas stations are a prime robbery target. Credit cards mean less cash in the till. And less chance for employees to steal from the till, and less chance of counterfit money.
Finally, it's a competitive market. If stations don't accept a card, they'll lose business to elsewhere. There's a gas station on either side of an intersection, and you can always tell which station is a few cents cheaper because it's the one with customers fueling up while the other one is a ghost town. They feel they have to compete on convenience or go under, and the credit card companies recruit you into the game with higher cash back rewards.
I am not sure but probably it depends upon the cut the credit card company receives from the merchant. For Hotels such as dining etc. the cut could be more.
Again, periodically, many merchants join with the card company to launch promotions. It could be part of such promotions.
Apart from class of merchants, these points also differ on class of cards e.g a premium card will earn more rewards than a simple classic card.
