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How Reward Points Work: Retail, Interchange, Bonus Points, Exclusions

To the point Find out how reward points work in Canada: businesses, credit cards, bonus points, exclusions, interchange.

Understanding how points are calculated allows you to avoid pitfalls, but also to exploit certain flaws related to the parameters allowing calculations.

The transaction you just made at IGA with your BMO AIR MILES Mastercard may seem simple, but IGA and BMO do not have the same information to credit your AIR MIL ES miles and the number of miles credited will likely be different on your two statements.

In this article, I want to show you the nuances to know about points.

Merchant points

Whether you buy in-store or online, when a merchant credits you with points for your purchases, they have a lot of information about what you’ve bought, starting with the information about each product on your bill.


Since they have access to the transaction details, a merchant can therefore exclude certain lines when calculating the number of points obtained. Often, the same exclusion rules will also apply to senior and employee discounts.

The exclusions are something that you have to watch out for, even if you have to go and read the fine print. There are several categories of exclusions, each with its own history and rules of application.

Statutory and regulatory exclusions

Some products cannot be discounted by laws or regulations. This legally prevents the merchant from giving you points on these products.

In Quebec, the Pharmacy Act prevents pharmacists from giving discounts on prescription and non-prescription drugs. Therefore, Quebec pharmacies cannot give points on drugs.

Produits non admissibles offre Jean Coutu
Produits non admissibles offre Jean Coutu

Also included in this exclusion category are:

  • tobacco
  • lottery tickets
  • and even in some cases products where floor prices apply, such as milk or beer.
Fees and taxes

The merchant can also decide to exclude certain lines from the transaction on which he makes no (or little) profit margin. For example:

  • taxes,
  • delivery costs,
  • bottle depots,
  • tips.

Example: Aeroplan and Uber Eats

Offre et points Aeroplan
Offre et points Aeroplan
Category exclusion

Merchant may also specifically include or exclude product categories/ranges.

The main reason is that the business does not make enough profit margin on the sale, for example public transport tickets, stamps, etc.

Example: Aeroplan and Amazon

Comment accumuler
Comment accumuler

AIR MILES Shop, the Aeroplan E-store and Rakuten have started to exclude several categories for Amazon since last year. The eligible categories change quite often and depend on the portal used. It is more than advisable to check the category of the product you want and take a screen shot of the exclusions when you buy to avoid surprises

Exclusion of gift cards

For a merchant, there is a big difference between selling a gift card from another banner (e.g. Netflix, Amazon) and a gift card from their own banner.

In the first case, we are talking about a product like any other, the store will make a margin (between 5% and 15%) when selling.

In the second case, the store will not make any money on the transaction, it will simply receive a payment from the customer that it will exchange for a gift card and place this amount in trust (the clearinghouse).

When the customer uses the gift card, the merchant will make a profit on the sale of the goods and will be paid with the money in the trust.

This is why, in most cases, the two purchases are not treated in the same way.

5X The Points On For Cobalt Cardmembers!
Exclusion from the transaction

Finally, the merchant may decide to exclude the transaction entirely under certain conditions. For example, if a coupon or another promotion is used, or if the transaction is already subject to an invoice reduction such as an employee purchase or senior discount.

This is the case for Uber Eats when using the Aeroplan eBoutique.

Example: Amazon and Uber Eats

Uber Eats

It is therefore necessary to be very vigilant about the rules of exclusion which will vary from one merchant to another.

The calculation of the base points

Earning rate

Base points are calculated on the transaction once exclusions are removed, and once discounts are applied (i.e. promotions, employee discounts, etc.).

For AIR MILES, IGA purchases are earned over a week from Monday to Sunday and not just per transaction.

The amount calculated this way will be used to establish the number of points you will receive for the transaction according to the scale pre-set by the program for this merchant.

In general, the number of points earned is proportional to the amount spent, but there some merchants apply a fixed rate, for example, when registering for a service or subscription.

Earning scale

Each loyalty program has its own currency and, as with foreign currencies, each currency has its own value: for example, a PC Optimum point does not have the same value as an Aeroplan point or an AIR MILES mile.

So each program will award points based on the currency value it uses.

Some programs will have a very strong currency and only offer 1 point for $10, $20 or $25 while other programs will offer a weaker currency and even give 100 points for $1.

Example of currencies and earning rate
Approximate value of the currency Example of earning for $100 purchase
AIR MILES 10.5 cents 5 AIR MILES bonus miles
Aeroplan 2.0 cent 100 points
PC Optimum 0.1 cent 1,000 points

However, most programs opt for a basic earning rate of 1 point/$1.

Rounding up

Each program (and merchant) has its own rounding method when calculating the number of points you should receive.

The majority of the programs will however use a rounding down and therefore to the advantage of the merchant.

For example, if all your purchases add up to $39.99 and the basic bonus is 1 point/$1, you will get 39 points, whereas if the accumulation is 1 point/$20, you will only get 1 point for this transaction.

And if your transaction is only $19.99, in the first case, you will receive 19 points while in the second case, you will receive no points.

Bonus points

The merchant may decide to apply a bonus (often temporarily) to the entire transaction, to a category of products in the transaction (e.g. cosmetics) or to specific products.

These bonus points are often linked to a specific campaign, and for campaign analysis and investment reasons, they are often counted separately from base points.


When the points on a transaction (or a category or a product) are multiplied, the principle is always the same: there is what the advert says (10x the points) and how this will be translated on the statement, i.e. the base points and a bonus to get 10x (so 9x the base).

For example: if we have a $100 transaction and the regular earning rate is 1 point/$, then we will see on the statement 100 base points and 900 bonus points for a total of 1,000 points (i.e. 10x the base total of 100 points).

Multipliers are based on the base points
  1. If you get 0 base points, even with a 20x multiplier it will still give you 0 points.
  2. If your transaction is $18 and the base offer is 1 point/$10 but with a 10x points promotion, you will only get 1 base point and 9 bonus points so only 10 points.

Bonus points on products

There are also promotions in the form of bonus points on specific products (e.g. 5 AIR MILES bonus miles). In this case, the bonus is triggered when the specific product is purchased and is added to the points earned on the total transaction.

Evenement points bonis
Bonus miles

Bonus points on transactions

There are also some promotions that will be triggered after a certain purchase threshold, the goal always being to get you over that threshold.

Example: if the average grocery cart is $80, why not force the purchase of a few more products by offering a few extra points when the customer exceeds $100.



Are the promotions cumulative?

In most cases the answer is yes, but perhaps not as cumulative as one would like to think.

To simplify the example, we will use a base offer of 1 point/$1.

For example, if there is a 5x points promotion, and at the same time I have a coupon that gives me another 10x points after $100, and finally I buy 10 products priced $10 that give me 50 extra points per product, how many points will I have in total?

Note: unfortunately the answer is not 30,000 points (100+10 x 50) x 5 x 10

Regular points on $100 100
Bonus points for 5x (so 4x) 400
Bonus points for 10x (so 9x) 900
Bonus points for products (10×50) 500
Total 1 900

So the promotions are cumulative but not combinable.

Is a bonus of 10x points good?

A 10x points is always better than no extra bonus.

In fact, the real question is:

  • Are all 10x worth the same?
  • Is a 10x AIR MILES promotion really better than a 3x Aeroplan?

Example parameter:

  • A merchant available on the AIR MILES Shop and the Aeroplan shop (ex: Etsy)
  • Basic offer
    • AIR MILES: 1 AIR MILES bonus miles per $20
    • Aeroplan: 1 Aeroplan point per $1
  • Currency valuation
    • AIR MILES: 10.5¢
    • Aeroplan Point: 1.7¢
  • Promotional offer
    • AIR MILES: 10x miles
    • Aeroplan Point: 3x points

What is the best offer?


Yes, it’s counter intuitive but in most cases on the same merchant a 10x AIR MILES bonus miles promotion is less “interesting” than a 3x Aeroplan points promotion.

This is due to the bonus structure and the “rounding up”.

Credit cards points

In the case of credit cards, the “product” on which points are given is not what is in your shopping cart but the “payment solution”, i.e. what the merchant will pay as a fee so that he can collect the money from the transaction: interchange fees.

Costco Credit Cards

When you receive points through your credit card, the card issuer has much less information than the merchant to calculate the number of points to credit.

The myth of Level 3 information

Let’s dispel a myth right away: in Canada, the credit card issuer does not have access to the contents of the shopping cart (the “Line Item Detail of Purchase”).

Although Level 3 processing exists in theory, it does not apply to our Canadian credit cards (unlike American credit cards).


The vast majority of the information transmitted is Level 2 information between the merchant and the card issuer.

Indeed, it takes two conditions for the credit card issuer to have access to the famous Level 3 which contains the information of each product purchased from a transaction, the “Line Item Detail of Purchase”.

Condition 1: It must be a “Corporate” credit/payment card . These cards are not available to the general public, they are different from the SME or personal cards and are intended for large companies or government enterprises.

amex green card

Condition 2: The store must support the transfer of Level 3 information. We won’t go into details, but it’s an investment for the merchant that will only pay off if they do a lot of corporate cards transactions (mainly by saving on the interchange fees for those transactions).

Although the issuer does not know the contents of a transaction because it does not have access to Level 3, this does not mean that it cannot request a copy of the invoice from the merchant or customer if it is in doubt.


In the case of a credit card, exclusions and calculations are therefore made at the transaction level.

As when a merchant credits points, some transactions may be excluded.

Exclusions are mainly as follows:

  • Interest charges
  • The card ‘s fees
  • Cash advances (e.g. ATM withdrawals)
  • Payments on online casino platforms (e.g. Loto Quebec)
  • Payments on international money transfer platforms, currency purchases.

In addition, there may be certain clauses, such as those for American Express:

  • Transactions processed manually or by means of a paper process (for example, transactions processed by means of a credit card printout)
  • Purchase for which the merchant category is not defined.

The calculation of the base points

Contrary to the merchant’s part, when calculating a transaction, the whole transaction is either eligible or not.

So, for example, at the restaurant, it is the total amount paid, including taxes and tip, that is sent to the card issuer and on which the calculation is made.

For the same reason, you can earn points via your credit card on the purchase of medication even in Quebec.

featured pharmaprix

Bonuses by type of purchase

Often certain types of purchases will earn you extra points.

To do this, the issuer will use the information it receives from the merchant to determine if the transaction allows for additional accumulation (2x, 4x, 5x) whether it is for a specific merchant (Apple, Amazon, Expedia, Petro Canada, Ultramar, Walmart, Marriott, etc.) or a type of business (Grocery, pharmacy, gas station, Traveletc.).

Merchant Category Codes

The Merchant Category Code (MCC) is a standard for categorizing what a business sells.

MCC codes exist in two forms: codes identifying the category of the store (5912: Pharmacies) or in the travel field, codes with the name of the company directly (3007: AIR FRANCE).

There are about 1,000 different codes to classify businesses. For example, there are two codes for restaurants (5812: Food Service Establishments, Restaurants and 5814: Fast Food Establishments) and a specific code for Bars (5813).

Each payment mechanism in the store is assigned an MCC code, which is assigned to the store and not to the banner.

Users of the Milesopedia Facebook group have noticed several inconsistencies, such as stores in the same banner not having the same categorization. But also different categorizations for a restaurant when you pay for your meal in the dining room, on the online ordering platform or directly to the delivery person.

Communication between the purchase category and the MCC

When a credit card announces that it gives an additional bonus for a category of purchase (e.g. restaurant), it will define which MCCs are included in the bonus.

For example, when Tangerine mentions Pharmacies to Tangerine credit cardsThe following are merchants classified in category 5912 “Pharmacy” and when she talks about Restaurants these are merchants classified in categories 5812 to 5814 (“Eating and Drinking Places, Restaurants, Bars, Lounges, Nightclubs, Taverns and Fast Food Outlets”).

Reference: (Tangerine money-Back Program Terms and Conditions / Section 7)

Each card has its own definitions, which means inclusions and exclusions, and to say that bars are included in the definition of “restaurant” for one card does not mean that they are included for another.

The most used codes for the bonus

Categories Codes

7997: Membership Clubs

8699: Membership Organizations


5712: Floor Covering Blinds

5719: Miscellaneous Home Furnishing Specialty Stores

7641: Furniture, Furniture Repair

Bars 5813: Drinking Places (Alcoholic Beverages), Bars, Tavern
Cellular 4814: Telecommunication Services
Airlines 3000-3299: Brands (Air Canada, Air France, KLM, Lufthansa, ..)
Corner Store 5331: Variety Stores
Streaming 4899: Cable and other pay television

7941: Commercial Sports, Athletic Fields,…

7922: Theatrical Producers (Except Motion Pictures)

7996: Amusement Parks, Carnivals, Circuses

7991: Tourist Attractions and Exhibits

7929: Bands, Orchestras, and Miscellaneous Entertainers

7998 : Aquariums, Sea-aquariums, Dolphinariums

7832: Motion Picture Theaters

7829: Motion Pictures and Video Tape Production and Distribution


5411: Grocery Stores, Supermarkets

5462: Bakeries

5499: Miscellaneous Food Stores

Gas / Refill

5541: Service Stations ( with or without ancillary services)

5542: Automated Fuel Dispensers

5552: Electric Vehicle Charging

Hotels and motels

7011: Hotels and Motels

3500-3828 : Brands (Marriott, Sheraton, Hilton, BW, …)

Car Rental 3351-3441: Brands (Hertz, Avis, Alamo, ..)
Warehouse stores 5300: Wholesale Clubs
Digital Media

5815 : Digital Goods: Media, Books, Movies, Music

5816 : Digital Goods: Games

5968: Direct marketing , continuity subscription merchants

Tolls 4784: Toll and Bridge Fees
Drugstores 5912: Drug Stores and Pharmacies
Home Improvement

5200: Home Supply Warehouse Stores

5231 : Glass, Paint, and Wallpaper Stores

5251: Hardware Stores

5261: Nurseries, Lawn and Garden Supply Store

5713: Floor Covering Blinds

5714: Drapery, Window Covering and Upholstery Stores

5718 : Fireplace, Fireplace Screens, and Accessories Stores


5812: Eating places and Restaurants

5814: Fast Food Restaurants

Utilities 4900: Electric, Gas, Sanitary and Water Utilities
Parking 7523: Automobile Parking Lots and Garages
Taxi 4121: Taxicabs and Limousines
Public transport

4111: Local/Suburban Commuter Passenger Transportation

4112: Passenger Railways

4131: Bus Lines, Including Charters, Tour Buses

4789: Transportation Services, Not elsewhere classified)

Merchant Codes
SAQ / LCBO 5921: Liquor Stores
Costco / 5300: Wholesale Clubs

5310: Discount Stores or 5311: Department Stores

For Mastercard, Supercentres

5541: Grocery Stores, Supermarkets

The bonus is therefore calculated at the merchant level, which is why purchasing a litre of milk in a pharmacy is coded as “Pharmacy” and purchasing a toothbrush in a grocery store is coded as “Grocery”.

How to find out the list of MCCs for a purchase type

Experience helps you learn the categorization of a store, but there are some tricks to help.

The cards

First of all, Visa cards.

Even though these cards only give codes for the Visa network, normally the store is coded identically for Mastercard and American Express.


You can also use American Express cards which are much less precise in categorization but give a good idea for example for restaurants or travel.

american express google map


Classification information can also be found on credit cards statements when the purchase is charged to the account.

Example with CIBC:



The calculations are not perfect and are based on the information available from the merchant, card issuer or portal.

As the systems process millions of transaction lines per day, this results in “errors”, some of which benefit the merchant and some of which benefit the customer.

Errors that benefit the customer result in losses to the program, but those that benefit the merchant result in dissatisfaction and possibly customer churn, and that is a big risk for the card issuer.

Research has shown that it is 5-6 times more expensive to acquire a new customer than to retain existing ones.

We want to avoid frustrating clients with false positives as much as possible, which is why systems are often more permissive than what is stated in the program rules.

It is therefore important to understand the limitations in order to exploit the flaws to one’s advantage.

Join us on the Facebook group to learn more!

Come to discuss that topic in our Facebook Group!
Frédéric likes to play with numbers and is a specialist in rewards programs. As a family man, he uses his points to travel better and save money!

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