How customers can earn loyalty points with a co-branded debit card

The average American belongs to 17 different loyalty programs making it difficult to differentiate, especially against competitors where price becomes the critical factor. These buyers may only choose to be loyal when the price is right or most convenient, leaving brands scrambling to stay relevant. And, younger customers are far less likely to belong to a loyalty program, seeing less value in membership than their older counterparts. Underscoring the lack of loyalty interest, only 38 percent of Gen Z buyers give a brand a second chance before abandoning it for a competitor.

Often looking the same from year to year, the clock is ticking for current loyalty programs as they age out of favor. Membership growth numbers may only reflect consumer interest in price shopping vs. true loyalty. That is, a buyer may join a loyalty program to take advantage of a one-time discount or because it’s easy to sign up, not because they plan additional purchases.

Avoiding a race to the bottom, there’s a new way of thinking about loyalty programs, where there’s additional value added with every interaction. It strikes at the core of consumer motivation to join a loyalty program: To earn rewards with every dollar spent. 

Accelerating earnings towards redemption and rewards can drive action. Applying the goal-gradient hypothesis,

“Progress toward the goal induces purchase acceleration, and a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program.”

— Journal of Marketing Research

Personalization towards
meaningful rewards

With more data on purchases, consumers now expect that a brand will know them, and give them relevant offers. In fact, 75 percent of American consumers say they’re more likely to be loyal to brands that understand them on a personal level.

These offers can extend to rewards tiers, cashback, or discounts on desired items, or even the ability to save towards a big purchase without incurring BNPL interest and fees (we call this Save Now, Buy Later). 

So, how can you provide ongoing value in the membership program, accelerate points earning,  and drive true loyalty without additional cost.

Answer: Extend the current loyalty program by offering a branded debit card. 

Co-branded debit for loyalty:
How it works

A debit card is a pretty simple financial instrument. It’s funded by the consumer via app, using direct deposit, or in person (read more on funding here). There is no credit associated with the card, so there’s no credit check, or ability to overspend. That’s good news for debt-conscious consumers, and carries no risk for the issuing company, in this case, your brand.

Debit cards, like credit cards, do allow for capture of consumer spend data. But unlike credit, this data is first-party to the brand — not to an issuing bank. The application process is branded and completely owned by the issuing company, so there’s no unexpected disruption in the customer experience. All interactions can occur via the app, building more engagement and ability to present relevant offers. 

Drive more loyalty through
points accelerators

The closer consumers get to their next reward redemption or reward level, the more motivated they become. So give them a path to earn more.

Incentives for debit card use

Increasing loyalty engagement and purchase behavior means giving customers additional value and rewarding them meaningfully. 

  1. Everyday spending with point accelerators and merchant-funded rewards
  2. Behavior-based rewards triggered by a user action
  3. Holding an average balance over time to earn additional points 

Rewards for everyday spending

Merchant-funded rewards

Seamlessly added to the purchase process, your customers earn additional points when buying from thousands of merchants. These are funded by the merchants themselves, at no cost to you or the consumer. Each swipe at a participating merchant can earn points multiples for your loyalty program.

Points accelerators

The closer consumers get to their next reward redemption or reward level, the more motivated they become. So give them a path to earn more. Achievable tiers and escalating discounts or cashback percentages are levers a brand can control to drive purchase behavior for frequency, specific product types, or other special promotions.

Behavior-based rewards


Offer points and rewards tiers for social interactions. Share the app, encourage new loyalty members and reap the rewards.

Action-based rewards

Rewards can be based on purchasing specific items, buying at certain times, loading funds on a regular basis, or any activity that aligns with brand goals. 

Direct deposit for debit card funding

Loading funds via an existing credit card carries some cost (although loading in larger increments reduces transaction costs), loading funds via direct deposit carries little cost. Providing an incentive for direct deposit loading is paid for with reduced fees.

Earn points with balance

Customers who pre-fund and hold a minimum balance can earn points by just keeping funds in the card. Maintaining a minimum balance can automatically qualify for a premium tier. Brands earn yield on the consumer balance, which can be shared with the customer via additional points, further incentivizing holding a balance.

Gamification of the incentive experience

There’s a powerful tool that can be part of an existing app: Reward balance and progress towards a stated goal or the next rewards tier. This visual reminder illustrates how close a customer is to getting the item or service they want and becoming an elite loyalty member that carries additional benefits. Consider adding this to the opening screen on your app or via push notification — a constant reminder of what’s possible — combined with offers on how to accumulate additional points. 

Consumers will see that for each month they’re accumulating points based on their regular shopping habits, with surprise bonuses based on activity, promotions, and merchant-funded rewards accelerators.

Loyalty Program Image Blog

Extend the longevity and success of your loyalty program

Offering a co-branded debit card is a natural extension of a loyalty program. It keeps the offers fresh, allows for accelerated rewards earning, gives brands ownership and control of the customer experience, and generates priceless first-party spend data to personalize offers and products. 

To better understand how a debit card works, and how it’s different from a co-branded credit program, read this article.

Written by Alviere