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Integrating A Credit Card Into Your Loyalty Program? Pay Attention To These Key Trends

As CTO of Engage People Inc. Len Covello helps companies differentiate loyalty programs to deliver a better experience for their customers.

Published September 20, 2023, 8:30 a.m. EST

When it comes to the ever-evolving world of payments, one thing is certain. Credit cards aren’t going away. The ways we use them are changing, however. Swiping is no longer the only option with the advent of mobile wallets and tap-to-pay solutions. But there’s much more to unlock from credit cards beyond delivering convenience.

Merchants who are prioritizing a loyalty program launch or revamp should give serious thought to integrating a credit card into their offering. An exclusive physical or virtual card that members can leverage to earn and redeem rewards delivers deeper insights into customer behavior, preferences and spending patterns—especially with the introduction of advanced data analytics and machine learning techniques.

These techniques have made it easier for retailers to analyze the data collected through credit card transactions, thus streamlining how brands personalize offers and improve targeting.

Personalized offers and better targeting are keys to maintaining customer loyalty and are the building blocks of any good loyalty program. But retailers have every opportunity to go beyond this by tuning into a few key trends to make their credit card—and entire loyalty offering—stand out.

It’s all about the experience.

Consumers are demanding more from retailers today beyond a simple transaction. They’re looking for a shopping experience that is personalized, immersive and convenient. In addition to leveraging advanced data analytics and machine learning to deliver personalization, merchants should consider tapping into emerging trends in the payments space to deliver convenience.

For instance, contactless and mobile payments should be on brands’ radars as they consider launching or revamping their loyalty card offering. Pat Phelan, Managing Director UK&I at GoCardless, notes, “Technologies such as digital wallets, virtual cards and embedded finance are already replacing cards.”

Rather than wrestling a physical card out of their wallet or purse, this capability allows customers to make secure and convenient transactions with their smartphones or wearable devices.

In addition to digital wallets and virtual cards, embedded finance is on the rise within the world of payments. However, retailers should focus more specifically on embedded rewards. Brands are increasingly exploring the concept of embedded rewards, where rewards and loyalty points are automatically earned and redeemed as part of the payment process.

Take Citi, for example. Earlier this year, the company announced its expanded embedded payments strategy with its suite of Citi Pay® products, citing that 85% of Americans want retailers to have flexible payment options at checkout. Embedded rewards eliminate the need for separate loyalty cards or accounts and provide a seamless experience for customers.

Speaking of “embedded,” with the rise of voice-activated virtual assistants and smart speakers, brands should also consider integrating credit card functionalities into voice commerce platforms. This allows customers to make purchases, check account balances and access credit card benefits through voice commands.

Go above and beyond.

For retailers that really want to stand out and attract new customers, particularly Gen-Z customers, they might consider adding an element of social responsibility and sustainability into their loyalty credit card integration.

Recent consumer research conducted by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania found that “three-quarters of Gen-Z consumers said that sustainability was more important to them than the brand name when making purchase decisions.” The research also notes that members of all generations are paying attention to these efforts.

With increasing consumer awareness around these issues, brands can integrate credit card offerings with initiatives that align with these values. This can include donating a portion of credit card purchases to charitable causes or providing rewards for eco-friendly purchases.

In addition to being socially and environmentally responsible, younger generations are keen to take control of their financial journeys. Offering personal financial management tools as part of credit card offerings can help customers better manage their finances with features like spending trackers, budgeting tools and customized spending insights. Providing added value through a financial wellness offering empowers customers to make informed financial decisions, and it helps retailers manage risk at the same time.

Finally, brands that are looking to bring their offering to the next level might also consider exploring partnerships and coalition loyalty programs to expand the reach of their credit card offerings. Collaborating with other brands or loyalty programs allows customers to earn and redeem rewards across multiple brands, increasing their engagement and satisfaction while helping their points go a bit further at a time when more consumers are being cost-conscious.

Don’t forget the basics.

While there are a plethora of options for retailers to leverage their loyalty card offering to go above and beyond to appease consumers, none of them matter without the basics. This includes enhanced security features.

For brands launching or revamping their credit card, it’s critical that they stay updated on the latest advancements in credit card security to protect customer data and prevent fraud. After all, loyalty programs are a key target for bad actors. Integration of biometric authentication, tokenization and advanced encryption methods can enhance the security of credit card transactions and instill customer trust.

By keeping abreast of these emerging trends and innovations—from the foundational elements to the customer experience and beyond—brands can adapt their credit card integration strategies to meet evolving consumer expectations.

In a rapidly shifting retail environment where everyone’s competing for consumer attention, the brands that stay ahead of the curve by providing compelling credit card offerings will have an advantage when it comes to fueling loyalty.

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