Today I was asked whether it is possible to pay back your friends and family with a credit card, in order to earn points.
The answer is yes, through PayPal. But it's not worth it. The person you are paying is dinged about 3% and you earn the equivalent of 1% in points. When paying back friends, stick with cash, cheque, internal bank transfers, or non-credit card PayPal payments.
We rarely think of it, but one of the reasons why credit card companies can give you rewards is because every time a credit card transaction is made the person accepting the payment is charged a few percent of the payment.
Credit Card companies charge the business between 1.5% - 3%. Amex charges the highest rate, whereas Visa/MC charge lower rates. This is why most places do not accept Amex.
Also, businesses get charged for DEBIT purchases, and not all banks offer you any rewards! Only Scotia, BMO and PC pretty much.
But Credit Card companies mainly make money on those people who do not pay their full bill on time! Interest rates range anywhere from Prime all the way upto 28.8% on department store credit cards.