Loyalty points remained largely confined within the programs they issued. This model is beginning to decline as a growing number of initiatives promote greater flexibility, making it easier to earn, redeem and use rewards across shopping trips rather than within a single brand.
PYMNTS Intelligence has found the potential to reduce the friction consumers face as they try to discover, activate and redeem rewards. As rewards become easier to use, merchants have a better opportunity to influence purchasing decisions before shoppers complete the transaction rather than after.
The results confirm that rewards remain an important driver of consumer behavior. according to PYMNTS Intelligence Embedded Presentations: The Billion-Dollar Opportunity Inside Recent Consumer Spending“, the impact of the offers goes far beyond the final purchase price. Seven in 10 consumers changed what they bought after seeing the offer, while 71% adjusted the amount they bought, and 43% switched payment methods to get the savings. Rather than suggesting that merchants need to create more rewards programs, the results point to making existing incentives much easier to access.
Convenience makes rewards easier to use
Consumers consistently point out that convenience has become as important as the reward itself. PYMNTS Intelligence found that 8 in 10 consumers would choose a merchant that offers a seamless shopping experience in which discounts, offers and rewards are automatically presented during checkout. Almost as many said they would consider changing their default payment method if there was another option that offered smart, real-time rewards.
These preferences extend beyond retailers. in “The Smart Basket Opportunity: Why Issuers Are Ready for a Better Rewards System” Exporters acknowledged that traditional loyalty programs often fail to influence the behaviors they seek to encourage. Less than half believe their current incentives are actively driving loyalty, card switching or spending patterns, while only 39% currently maintain merchant partnerships that expand rewards opportunities. More than 8 in 10 expect personalized offers to become a key component of loyalty strategies over the next five years.
The focus is notable because it shifts attention away from offering larger point balances and toward making rewards precisely visible when consumers are deciding where to shop and what payment method to use.
This does not mean that the industry has reached true reward transferability. Consumers generally still cannot transfer points freely between competing merchants or consolidate rewards across unrelated loyalty systems in the same way they might transfer airline miles between alliance partners. Most programs remain closed, with merchants controlling how and where points are redeemed.
However, recent retail partnerships indicate that the market is moving toward greater flexibility. One example of this is the extended relationship between JCPenney and Aeropostalewhich allows members of retailers’ loyalty programs to earn and redeem rewards across both brands. Although this arrangement is limited to a shared retail ecosystem rather than comprehensive portability, it reflects an effort to reduce barriers for consumers who are increasingly shopping across multiple brands rather than remaining loyal to a single merchant. The initiative expands as rewards can be used without requiring consumers to learn an entirely new loyalty program.
Elsewhere, another example comes from the beauty sector. Sephora Beauty Insider members They can earn and redeem Beauty Insider points not only at Sephora stores and Sephora.com, but also at Sephora locations inside Kohl’s after linking their accounts.
The ubiquity of real points will allow rewards to travel widely across merchants, issuers and payment providers. Today’s initiatives represent incremental steps instead. It makes rewards more flexible within select partnerships while maintaining each company’s control over its own loyalty economics.
For traders, this may be a workable compromise. PYMNTS Intelligence research suggests that consumers don’t care who funds a reward as much as whether or not it appears at the right moment and requires little effort to redeem. Built-in offers, automated rewards implementation, and simplified redemption reduce friction without requiring businesses to give up their proprietary programs.
Exporters reached a similar conclusion. Instead of viewing rewards solely as post-purchase incentives, many now view them as tools to influence payment choice before the transaction is completed. Consumers have made their expectations clear. They want rewards that fit naturally into their shopping experience rather than requiring them to search multiple apps, activate offers, or remember which payment method provides the most value. Companies that reduce these friction points have a better chance of influencing purchasing decisions, increasing conversion, and enhancing customer loyalty.
