Research

Pay With Points: Reducing the Friction in Loyalty Redemption

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In our groundbreaking 2018 Delphi Report — The Future of Loyalty Marketing — The Wise Marketer identified emerging trends associated with creating less friction for members as they engaged with loyalty marketing programs. One of these trends focused on redemption of points/miles and how new techniques were emerging to make the process more convenient, higher value to the member, and with much less friction. Fast forward 3 years, and we are beginning to see a frictionless future associated with the conversion of points to real currency and applied at any point-of-transaction to complete a purchase.

Curious about this development we reached out to a select group of US-based financial services professionals to get their opinion about Pay with Points as a loyalty mechanism. A brief survey was conducted in July 2021 with 26 credit card issuers, payment processors, and networks. The survey was administered online and was by invitation only. Anonymity was guaranteed for all respondents.

All respondents were given the following introduction:

The Wise Marketer is conducting a survey among credit card issuers and their partners regarding ‘pay with points’. When considering ‘pay with points’ please focus on the mechanism whereby loyalty points/miles accrued in a cardholder’s account can be converted to a fiat currency and redeemed at any point of transaction with both offline and online merchants.

We’ve been studying the patterns for reward redemption among consumers and have identified trends that are poised to become influential over the next 12 – 24 months. The research focuses on developing insights into industry perspectives on using points, miles, and other rewards currency “like cash” to pay for purchases using a credit card. Whether in a physical store or online, there are more opportunities to increase the liquidity of rewards points and we ran a brief survey to learn more.

We are currently conducting a second phase of this research to learn what cardholders think and whether or not their perspectives align with the issuers. Phase 2 will be published later this year.

To access the complete Phase 1 report please complete the following download form. 

[Research] Pay with Points: phase 1

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To learn more about the loyalty research services available from The Wise Marketer, please contact us.

Pay With Points: Reducing the Friction in Loyalty Redemption
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