Reinvigorating Card Loyalty with Instant Gratification

David Johnson
Senior Vice President, Emerging Commerce Products
Posted on September 1, 2016

Reinvigorating Card Loyalty with Instant Gratification

Innovative ways to earn and burn with loyalty redemption networks

The world of loyalty has significantly changed over recent years. Once at the forefront of customer retention, many card loyalty programs are out of step with modern consumer demands: cards without worthwhile incentives just do not add up. Prepaid cards have been hit heaviest, but debit and credit card loyalty schemes are also facing significant issues. Meanwhile, consumers are looking to maximize their customer rewards by scrutinizing the market – the best redemption options are critical, with instant gratification increasingly a deal maker.

All After the Fact

A fundamental problem with traditional loyalty programs is delayed fulfillment; earn points now, get a free gift somewhere down the line, after going through a complex time-consuming registration and redemption process. The post-transactional nature of rewards comes from a time when instant payout or immediate reductions were impossible due to past banking and retail infrastructure. However, as we increasingly interconnect our commercial environments, customers expect instant returns without any complex redemption process.

The reduction in customer loyalty program participation has left huge numbers of dormant accounts credited with only a few points, with no hope of ever accumulating enough credits to get something worthwhile. Often consumers need to earn many credits, often taking months or even years, to receive the most basic rewards in the program. Not only a significant liability, the loyalty program has become a disincentive for these low-point customers.

Without tangible rewards in real time, the existing inflexible post-transactional loyalty schemes are out of step with demand. Once they have earned enough credits, consumers are no longer prepared to make the effort needed to redeem rewards – they want it now. Making payment and loyalty systems work together in real time at the point of sale may be complex, but it is now becoming a reality.

Keep it Instant (and Fun)

What are needed are mechanisms that allow cardholders to redeem in new ways. Rather than saving credits for months before registering on a website to select a gift, why not offer an instant discount on your purchases – at the POS? Would you prefer: $0.50/gallon saving on a refueling stop, or a free but unnecessary item selected from a corporate gift catalogue? Fuel providers can offer loyalty card holders real-time discounts on fuel at the pump. In this scenario, the consumer gets rewarded immediately, in real time, with real money. Providing a genuine and significant discount on something consumers do regularly, and as part of the purchase, is greatly appreciated by consumers.

Driving interest and repeated card usage is the goal, so it is vital to engage the consumer and reward usage instantly, and in a fun, intuitive and compelling manner. By providing mechanisms whereby lower point totals can still generate tangible benefits – through POS reductions or the ability to enter a lottery with a chance to win big – allows even low-end users to participate and burn their points thereby reducing the number of dormant accounts. This is especially valuable to the prepaid card market as value and volumes are lower than for debit or credit cards, but through gamification, small point totals can still generate tangible returns.

The ability for payment, merchant and loyalty systems to interact has seen the emergence of loyalty coalitions and aggregators. Through such cooperative initiatives, points from one scheme can be used across multiple merchant sectors. The numerous point banks, such as airlines, retail outlets, fuel networks, hotel chains, etc., have allowed aggregators and brokers to unify points from multiple loyalty schemes for use at multiple outlets. For the consumer, interest is re-engaged and redeeming genuine value from points is much easier, which drives increased usage and retention.

Redeem in Real Time

It is vital to bridge the gap between banks’ payment systems and retailers’ POS terminals. By gamifying customer loyalty schemes to bring more players to the table and offering instant redemption and savings at the time of purchase, loyalty schemes become part of normal transactions. Consumers get real benefits instantly through a simplified experience, generating increased usage.

Merchants see incremental sales growth and can leverage existing integrations with flexible financial and operating models. Financial institutions benefit from a new lower cost rewards offering that is promoted to the top of wallet status – and with a built-in point burner strategy. Consumers gain increased buying power with better access to targeted deals and offers, easier redemption, and all resulting in higher brand affinity and a high perceived value. Loyalty can become part of normal lifestyle – do what you normally do and the bank will give you some money back for it.

A New Way to Look at Loyalty Marketing

It is time to look at card loyalty in new ways. In order to expand and improve usage, it is vital to offer customers exciting and innovative ways to redeem points at the POS. Instant gratification is a central foundation of modern life, and loyalty is no different, anything else will fail. This is not just an issue for the Millennial generation and is not dependent on mobile apps that appeal to only the tech-savvy. It works for 18 year olds and 60 year olds in all demographics.

As the integration of merchant POS with payment and loyalty management systems develop, cross sector partnerships will allow us to offer consumers new and exciting ways to redeem points at the point of sale for discounts and offers.

It is important to keep the consumer experience at the forefront of design and development; if we are not creating customer experiences that are driving deeper relationships and building consumer loyalty, then we are not designing impactful solutions.


  • Will loyalty point banks and aggregators expand as expected to offer an ever wider array or retail options for card loyalty points?


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David Johnson
Senior Vice President, Emerging Commerce Products

DJ is the Product Division Lead over Loyalty, Prepaid, EBT – Government and Merchant Products. DJ joined FIS in 2007 and has over 20 years of payment industry experience with roles in product development, strategy, consulting and business development. Before FIS, DJ managed Online Banking and Bill Pay for a Top 15 US bank. DJ earned his MBA from Emory University and a degree in Finance from the University of Florida.