When it comes to loyalty, many brands still place their bets on credit. For years, co-branded credit cards have been the default path to deeper customer relationships, especially in industries like travel, hospitality, and retail. But the market has changed: today’s consumers — particularly younger ones — are choosing debit more often, and loyalty strategies built around credit alone are now leaving both engagement and revenue on the table.
Debit isn’t just a payment method — it’s a powerful tool for loyalty, access, and yield. By offering debit as part of a loyalty program, or even as a standalone branded product, companies can meet customers where they are, create daily engagement touchpoints, and unlock new revenue streams.
Co-branded credit card programs: Profitable, but limited
Credit card partnerships have long been a financial engine for airlines and hotels, generating billions through rewards programs and the sale of points or miles to card-issuing banks. But these programs aren’t accessible to everyone. Many consumers — especially Gen Z, underbanked, or credit-averse shoppers — either don’t qualify for credit or don’t want another credit card. Debit, on the other hand, meets these customers with lower barriers, while still fostering loyalty and delivering meaningful yield.
Offering a branded debit card allows companies to move beyond “earn and burn” point systems and into the customer’s everyday financial life. Debit transactions generate interchange revenue, enable real-time rewards, and encourage repeat behavior — all without the risks associated with credit. For customers, it’s a simple, trusted way to engage. For brands, it’s a long-term loyalty asset that produces predictable revenue.
Major U.S. airlines earn billions from co-branded credit card deals — not only from interchange fees but primarily from selling miles or points to card-issuing banks (like Chase, Citi, or Amex), which in turn reward cardholders.
Delta Air Lines earned $6.8 billion from its American Express co-branded card partnership in 2023 — nearly 20 percent of its total revenue.
American Airlines and United Airlines report similar multi-billion-dollar deals with Citi/Barclays and Chase, respectively.
How it works: Airlines sell miles upfront to banks — regardless of whether those miles are redeemed. This model creates customer stickiness and deepens loyalty, all while generating high-margin, non-flight revenue. So the real question for travel and hospitality brands is: How can they expand these profitable programs to include even more customers?
The answer is simple: Offer debit cards.
Open-loop debit cards offer customers the same flexibility: Spend anywhere, earn points. For companies, they deliver new revenue while broadening the audience beyond the subset of customers who apply or qualify for credit cards.
The data makes it clear:
- Debit is the dominant payment method in the U.S. As of 2023, debit cards accounted for 30 percent of all consumer transactions.
- Younger consumers prefer debit over credit. A Bankrate study found that 73 percent of Gen Z prefer debit for day-to-day spending .
- Debit spending is habitual — perfect for loyalty. Unlike credit, debit encourages frequent, lower-friction transactions, which naturally drive the repeat behavior loyalty programs are designed to reward.
- Interchange delivers revenue — even on debit. Issuers can capture an average of 0.8 –1.2 percent in interchange revenue per transaction, making branded debit programs financially attractive even without credit exposure.
Building customer trust with financial services
Even loyal customers hit the credit barrier. Despite a strong purchase history, some of your best customers may be denied a credit card, or choose not to apply at all. These decisions are outside your control — dictated by issuing banks, not by loyalty or brand affinity. Credit eligibility can also change without warning, subjecting customers to rejection even after years of loyalty.
Debit offers a different path — one that builds trust. A debit card gives brands a low-barrier, accessible way to deepen financial relationships, especially with underbanked or credit-averse audiences. It’s often the first step in a longer customer journey, opening doors for future offers like credit, stored-value accounts, or rewards-based funding.
With embedded finance, your company can offer debit cards directly to your customers — without a bank. You decide who qualifies, whether it’s customers who’ve applied for credit and been declined, run through a second-look program, or entirely new audiences. It’s the low-hanging fruit on your revenue tree.
Earning interest on "other people’s money"
The financial principle of “Other People’s Money” applies perfectly here. When customers hold funds in a branded debit account for everyday spending or future purchases, your business earns interest on the aggregated balance — until those funds are used. When paired with rewards like points or miles, this creates a powerful incentive for customers to load and hold more funds, amplifying both engagement and earnings.
More offers, more loyalty, more revenue with debit
Forward-thinking brands are expanding relationships. Debit cards create an inclusive entry point for loyalty, opening doors to customers who credit products can’t reach, while offering measurable returns through engagement, data, and yield. As customer preferences shift, the brands that move beyond credit will be the ones that build stronger, longer-lasting loyalty.
As credit markets tighten and customer expectations evolve, expanding loyalty beyond the credit card is no longer optional — it’s a strategic necessity. Debit cards offer companies a flexible, accessible way to deepen relationships, capture new revenue, and reward loyalty without limiting access to only those who qualify for credit. For industries like travel, hospitality, retail, and beyond, debit is the future.
