From a companies perspective, what a loyalty program cost you is higher price. When you redeem your points for merchandise, many entities always place restrictions such as black-out dates and expiry dates, so they can protect themselves from losing money to those fee-paying customers.
It’s correct that the true frequent users benefit from the program, but those who use a service or product only a handful of times a year will be paying a slightly higher fee to subsidize the frequent users.
Also, especially with credit card companies, points for loyalty programs are under the card user names. They are not transferable. Also, for the business card user, the persons name that is on the card still receive points even though their companies pay the bill. The reason behind this was to award the person who ultimately decides which item to purchase
Many low-cost merchants are not big fans of loyalty program because of the hidden cost behind it. That’s also one way that lower cost retailers can keep the price low. For larger retailers, they may want to discontinue loyalty programs. However, if one company decides to drop their program, customers may go to other merchants. The underlying question is, which customer does a business want to get on the nerve of?