The perceptions and realities of rewards programs are changing as consumers redefine what good loyalty looks like. Simple loyalty mechanics are no longer enough.
Rewards must be meaningful, contextual and delivered at the exact moment a consumer is ready to engage, said Avery Walter Miller, vice president of Loyalty Solutions at Visa.
Shift in Consumer Expectations
For decades, most bank loyalty programs have been anchored in one product: the credit card. As Miller explained during the “Beyond the Card” series interview, traditional financial institution loyalty systems have long been tied to the profit and loss statements of a credit card business.
Historically, credit cards generated a margin, so rewards and marketing were designed to increase card spend. Miller said that the structure is still common across the industry, with larger financial institutions investing significantly more in those programs than smaller ones. The result has been a market where loyalty appears fundamentally similar across issuers.
But margin pressures on interchange and fees mean banks can no longer rely solely on card economics. “It becomes essential to find new funding sources,” Miller told PYMNTS.
Loyalty is more dynamic and more competitive than ever, Miller pointed out. Consumers are enthusiastic about rewards and will often sign up for programs immediately. But they are overwhelmed. On average, individuals are enrolled in 18 or more loyalty programs.
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“But they’re actually actively interacting with only about half of them,” Miller added, which speaks volumes about the gap between the initial excitement of becoming a member and the follow-through in terms of actually using those programs.
A rethinking of loyalty as a strategy requires banks to craft programs that are personalized, relevant, and holistic to the total customer relationship; in other words, a departure from the one-size-fits-all model built solely around credit card spend.
Rewards That Match Daily Behavior
Miller emphasized that consumers never object to being rewarded for loyalty. “Most would not balk at the idea of being rewarded for sticking with their favorite brand,” he said. And yet the experience frequently falls flat when it fails to fit into a consumer’s day or priorities.
Personalization can identify a preferred merchant, but relevance determines when and how that offer should appear.
Miller shared one example. “You don’t want to promote my favorite coffee shop as I’m rushing past it late for a meeting,” he illustrated. The real value arrives when the offer appears earlier, giving the consumer time to plan for it. That is the type of contextualization that keeps people engaged rather than irritated.
Data, Margin Pressure and New Funding Models
The engine behind that shift is data. Banks already hold high-quality behavioral data that can be used to understand preferences, timing, transaction patterns, and intent signals. Partnerships extend this capability further. Merchant-funded offers give banks a way to deliver real value without draining their own economics. Miller described these offers as a compelling addition for banks because they introduce a new funding source for rewards. Merchants benefit from larger baskets, better conversion and access to new customers, and consumers see richer offers in more places.
At a time when bank revenue centers are tightening, Visa is helping shift loyalty economics away from pure card P&Ls. Banks can reward behaviors like bill pay, deposits, wallet provisioning or digital sign-on, which yield lifetime value even though they don’t necessarily produce revenue in the moment, Miller said.
Turning Partnerships Into Personalization
The loyalty ecosystem is complicated, fragmented, and filled with specialized providers. “There is no silver bullet for loyalty technology,” Miller said. Visa solves the pain points by “stitching together that complexity,” into a single package of APIs, SDKs and white-label offerings so banks of all sizes can deliver seamless experiences across mobile, desktop, point of sale, browser extensions and ATMs.
Visa also applies its own global marketing and engagement insights to help banks surface the right offer for the right customer at the right time. This includes running “the next best campaign” and deciding which brand of merchants should be “elevated” so customers stay engaged, Miller said.
A modern loyalty program must span every channel where a customer can transact or browse. “It’s about an omnichannel experience all through one interaction,” Miller said, meaning a consistent reward experience whether a consumer is shopping online, scanning a browser extension or interacting with an ATM. The global merchant network further enhances the experience. When a customer travels, Visa can surface relevant merchant-funded offers wherever they go, Miller said.
AI Raises the Stakes for Each Transaction
Artificial intelligence (AI) is accelerating every trend in loyalty, he said. It will make it easier for consumers to find the best deals and easier for banks to optimize targeting, segmentation and relevancy. But it also creates a new competitive frontier, according to Miller.
“In the world of AI agents … we are actually going to see the fight happen for every single transaction,” Miller said. Instead of competing for top of wallet, issuers will compete repeatedly for top of mind.
