Cheat code for loyalty cards: Integrated personalization and point-of-sale rewards

Thursday, March 20, 2025

4 Minute Read

Keeping a card top of wallet starts with delivering a great experience

Did you know that Americans belong to an average of 19 loyalty programs per person? And of those 19, nearly 10 are active! Loyalty programs are intended to drive repeat business, but can struggle because of their inability to adapt to changing customer expectations.

The loyalty game has become much more competitive, and cardholders may have trouble finding the right rewards and easily redeeming them.

Redemption options in traditional credit card loyalty catalogs can be limited and expensive. They have long focused on higher ticket reward items such as travel and experiences, and come with a delayed timeframe to enjoy them (e.g. taking a trip in June that you book in March).

Cardholders are losing interest, and that’s become apparent with travel loyalty program usage having stagnated the past few years. Hotel loyalty programs are having a more difficult time drawing repeat guests than other travel loyalty programs, according to a Morning Consult report.

Rewards points also don’t go as far anymore, especially for travel, which means cards are becoming less valuable to cardholders. That’s not to say consumers don’t want credit cards for their rewards — quite the opposite. Almost 75% of Americans cite rewards-related factors (such as a sign-up bonus) when deciding which credit card to open. Plus, 55% ranked loyalty and rewards as the top reason in influencing which credit card to use to pay.

Cardholders want loyalty programs with more attractive, affordable and flexible options they can redeem for at the point of sale — such as everyday items including groceries and gas. In fact, nearly 80% of consumers would engage more in their loyalty program if the ability to pay with points was offered at checkout. That’s according to a new survey from The Wise Marketer, commissioned by Engage People, the only loyalty network that enables program members to pay with points directly at checkout.

Innovation is needed to enhance customer loyalty, streamline reward redemption and provide an engaging experience.

Almost 75% of Americans cite rewards-related factors (such as a sign-up bonus) when deciding which credit card to open.

“Shop with points”: Keep cardholders reaching for that card

When it comes to loyalty programs, cardholders want more reward choices in one place and easy-to-redeem points for those items anytime. Some loyalty programs are expanding their redemption options to offer more immediate rewards such as cash back or the ability to pay with points.

Many cardholders are already reaping the benefits, with 61% using rewards for cash back or gift cards as opposed to 17% for a free flight and/or hotel stay. When it comes to choosing the best feature of a rewards credit card, the numbers show a similar disparity: Cardholders prefer cash back (50%) over travel (9%).

Another option is shopping with points that cardholders accumulate through transactions.

A cardholder can shop at a retailer or e-tailer, using card loyalty points to cover the partial or total cost of their items at checkout. This capability is preferred by 64% of consumers.

This approach has also shown to benefit card issuers as incremental translation and spend activity can generate additional value for a loyalty program.

Paying with points for a purchase can be appealing to cardholders because it offers more immediate gratification at the point of sale. It's about driving customer engagement without detouring from their typical interactions to deliver a great experience.- Sabrina Latham, Vice President of Product Management, TSYS. Paying with points for a purchase can be appealing to cardholders because it offers more immediate gratification at the point of sale. It's about driving customer engagement without detouring from their typical interactions to deliver a great experience.- Sabrina Latham, Vice President of Product Management, TSYS.

A personalized approach to loyalty

Successful loyalty programs have moved beyond tracking points and applying rewards.

They integrate with a point-of-sale system and e-commerce platforms to streamline transactions. Those point-of-sale systems can also match financial transaction data (purchase history) with loyalty data to reveal customer insights. That information can be used to understand customer preferences and behaviors, so issuers can create tailored, customized communication and rewards.

With personalized rewards being important to 74% of cardholders, it has the potential to increase engagement and improve loyalty due to repeat business.

This approach can also help to avoid sending unattractive rewards, which 71% of consumers are turned off by as they perceive them as low-value.

Unfortunately, many reward programs don’t make it easy to engage beyond making a purchase. Less than 25% of programs are personalizing member experiences based on previous interactions, purchase history and stated or inferred preferences.

“Reward points and experiences should always be connected to and personalized for cardholders’ daily interactions and transactions,” Latham said. “This helps to better understand their changing expectations, and ultimately continue to retain them as loyal customers.”

A one-stop shop for rewards and redemptions

Connecting all parts of a loyalty program to drive improved outcomes means having the right technology. Issuers need a solution that integrates a point-of-sale system with a redemption program and includes hundreds of retailers, from e-tailers to fuel merchants.

One example is TSYS Loyalty with Point-of-Sale Rewards, a loyalty servicing platform that provides a one-stop rewards shop for cardholders. It’s designed to deliver personalized loyalty offerings in one place, from rewards fulfillment to processing, travel, redemptions and more. Point-of-Sale Rewards is an added feature of TSYS Loyalty for cardholders to shop with points at checkout at leading retail/e-tailers including Amazon, PayPal/eBay, BP, Amoco and more through access to Engage People’s loyalty network.

Cardholders can redeem rewards for virtually any product, and the technology prevents friction during the redemption checkout process.

That’s a big point of contention with credit cardholders as 72% experienced friction in the past three months. In fact, nearly 1 in 3 say that friction occurs when trying to redeem their rewards. Factors include confusing technology (23%), lengthy redemption process (22%) and redemption details that were unclear (almost 22%).

This friction exposes potential problems with gaps in technology as well as a lack of sophisticated decisioning and engagement tools. If loyalty programs and merchants are not integrated smoothly or there are problems with integrated vendors into a card program, then cardholders may experience issues redeeming their rewards.

“The success of loyalty programs hinges on the customer experience,” said Jonathan Silver, CEO, Engage People. “Through technology, customers are able to pay with their points just as they’d pay with a credit or debit card at checkout, making them a ubiquitous form of payment. Integrating this capability into POS systems is advantageous for consumers, but also for retailers and brands because it reduces friction and encourages repeat spending.”

Are issuers ready to make a loyalty change?

There is immense potential for loyalty programs to enhance customer engagement. Yet many continue to be limited to basic points-for-purchase systems containing high-end rewards, which don’t give cardholders the flexibility they want.

Issuers need to embrace a loyalty program that expands offers and brands while enhancing customer engagement and driving success.

If you’re interested in learning how TSYS can help you align your loyalty program and Point-of-Sale Rewards within a comprehensive payments solution, please click here.