Visa, Novae Relaunch My Rewards 2.0 As Digital Currency Based On Loyalty Points, Miles

Visa and FinTech partner Novae have unveiled their revamped rewards program, dubbed My Rewards 2.0, with which loyalty points and miles can be “spent” at over 60 million merchants.

It’s a loyalty program overhaul that Visa and Novae say makes them the first to market with a working digital currency based on converted loyalty points. This development could have broad implications for the use of loyalty points at a time when air travel, for example, is off the table.

Rodrigo McCarthy, Novae’s head of payments, told PYMNTS, “With My Rewards 2.0, what we’re really bringing to life are two major factors. The most important one is the universal redemption [of miles and points] for everyday spend. What we’re [striving for] is to make … rewards balances available to spend how you want, where you want, empowering the user and giving them the freedom to do as they wish with their rewards points.”

My Rewards was originally launched in 2018. New features and benefits with My Rewards 2.0 include payment options like “Switch to Miles,” instant redemptions and “instant issuance that allows for that immediacy and instant gratification,” McCarthy said. “Our partnership with Visa has been crucial. We’ve been working on it for many, many months. We’re focusing on the ability for consumers to use their rewards points at over 60 million merchants around the world, whether that’s online, in-store or via contactless using a major wallet such as Apple Pay or PayPal – and really bringing [loyalty redemption] to life.”

My Rewards 2.0 also offers a beefed-up benefits package, including purchase protection.

New Strategies to Burn Miles and Points

When COVID-19 dealt a blow to travel, it threw into question the fate of trillions of loyalty points and frequent flier miles that no longer had much use. And travel loyalty programs have long suffered from a bad rep due to blackout dates and other restrictions.

“When the pandemic hit, consumer behavior changed all around. We’ve seen a huge shift toward eCommerce, and [in] the loyalty space it’s pretty much the same thing,” McCarthy told PYMNTS. “We see the pandemic changing people’s behaviors and changing consumers’ expectations … of what their loyalty programs mean to them.”

Noting that travel itself has long been the most popular form of redemption, and with travel down precipitously for now, cardholders wanted to know the new plan. “A lot of people started to question, ‘Hey, wait, what can I do with my miles? What is going to happen with my reward points?’” McCarthy said. “So, this is where all of the instant redemption starts to come into play, which is a little bit of what MyRewards is all about.”

Describing various pilots the partners have been running in Latin America in recent months to field-test their new digital currency based on loyalty points/miles, McCarthy said, “We consider ourselves … pioneers in [turning points to digital currency], and we’re very excited about it. [We’ve done] … some pilots and preliminary engagements over the last month, and … the reception has been incredible.”

He said people are using points as digital dollars to buy everything from high-ticket items like computers to their daily cups of coffee at the corner shop. “We’ve seen transactions happening at major online stores such as Amazon or even Apple, but also mom-and-pop shops [and] the corner bar. We believe that we’re alone right now,” he said, adding that “I think it will be a trend.”

Points as Cash and the Future of Loyalty

Converting loyalty points to cash at the point of sale (POS) is in line with other payments choice trends starting to dominate planning. Comparing My Rewards 2.0 to other consumer trends like buy now pay later (BNPL), McCarthy said, “We think it’s crucial to give that flexibility to the user. We believe that instant gratification [is part of the loyalty experience] … as is giving the user or the consumer the power to redeem instantly [in] the moment or even post-transaction.”

Developments such as My Rewards 2.0 may accelerate consumer decisions about which loyalty programs have value – and which don’t. “We think consumers are really questioning what programs they’re going to join, what kind of loyalty programs from which banks and which merchants, and which airlines deserve [their] business,” McCarthy said.

In its announcement, Visa said that “issuers benefit from the cost-efficient turnkey solution as well, bringing engagement, personalized service and value to their customers. The white-label feature allows issuers to customize and brand the program as their own, promoting early activation and spend stimulation, in an accelerated time-to-market of just three weeks.”

Seeking to ignite a new commerce category based on loyalty, McCarthy told PYMNTS to expect to see other loyalty providers overhaul programs to remain in-step with 2021.

“Banks, merchants, airlines, even other FinTech companies really have to rethink their loyalty strategies. Typically, these industry players work with predefined agreements, [so for] an airline loyalty program, you have to fly with their airline,” McCarthy said.

“But you have blackout dates [and] restrictions,” he continued. “If you’re dealing with one particular merchant, you’re … limited to that merchant. The reinvention [here is around] how to make a rewards program as liquid and as fluid possible to attract new customers and also continue to build loyalty with existing customers. We’re not alone in this. A lot of players are trying to find ways to burn those reward points and miles. We’re all going to get there as an industry.”

Points as Cash Requires Program Interoperability

Success comes down to consumer experience, as with so many things nowadays. McCarthy expects that consumers will begin to view loyalty through a different lens, and that will change things.

“We also focus a lot on the user experience, the perceived value, the omnichannel [aspects],” he said. “Be it through our app or through our [website], or be it through a major [mobile] wallet … we can upload our miles onto Apple Pay, PayPal, Gpay [and] all of the major wallets, and bring to life … a seamless omnichannel experience.”

McCarthy added that developments like My Rewards 2.0 are moving toward an open-source, interoperable loyalty points ecosystem that will alter the loyalty program as we’ve known it.

“Today we’re managing our own currency, which is miles. It’s what we’re focusing on. What we’re saying is that no matter what currency you’re working [with], the conversion [of] miles … will open up the world [of] redemptions. It can be currency as in legal tender, but it can also be … any other currency that comes along … even a cryptocurrency moving forward. We are … making sure the conversion happens seamlessly.”

While My Rewards 2.0 is being rolled out first in the Latin America region, McCarthy told PYMNTS that “the platform is ready to switch on globally. We already have some prospects to expand into Europe and even in the U.S., so that’s really our next step.”