Move Over Cash: Why Points Could Be the Future of Currency

What if points collected across different brands could become a form of currency? Loyalty programs are poised to redefine how people pay, save, and engage with businesses, evolving from occasional discounts or perks to a currency of their own. But to make this transformation happen, the industry needs to overcome barriers that have held points back for years: accessibility and personalization.

The untapped potential of points

 Loyalty points are everywhere, yet they’re not meeting consumer needs. By the end of 2025, an estimated 50% of rewards will go unused. For many cardholders, points feel more like clutter than currency, collecting digital dust. Why? Redemption remains frustrating. Programs often confine points to limited ecosystems that restrict their use to a handful of big-box retailers, leaving smaller merchants out of the equation.

This isn’t just a loss for customers—it’s a missed opportunity for issuers to build loyalty and earn top-of-wallet status. For points to become a viable currency, they must be easy to earn and just as simple to spend. Plus, unused points create a liability on the books for issuers, underscoring the need for a smarter approach.

Even pay-with-points programs that were designed to give customers more flexibility have struggled to gain traction. These systems are heavily reliant on costly point-of-sale (POS) integrations that create barriers for both cardholders and merchants.

Breaking barriers: What’s holding pay with points back?

 For points to succeed as currency, two obstacles must be addressed: accessibility and personalization.

 1. Accessibility

 One of the biggest obstacles to widespread point adoption is POS integration. It demands significant investment from merchants and ongoing maintenance, excluding many mid-size or smaller businesses from the loyalty ecosystem. This leads to limited redemption options, which means that points lose value in the eyes of consumers.

 A POS-independent system offers a straightforward fix. Imagine making a purchase, then receiving a text or email offer to redeem points against that transaction. With one tap, a real-time credit is applied—no delays, no merchant friction. This approach empowers merchants of all sizes to participate, expanding choices for cardholders and reducing costs for issuers.

2. Personalization

 Generic rewards no longer meet consumer expectations. Today, 71% of consumers expect companies to deliver personalized interactions, yet many loyalty providers are falling behind. Consumers want offers tailored to their preferences, spending habits, and transaction histories. A 2024 BCG study found that the top three benefits of personalization are value, enjoyment, and convenience.

The key to personalization lies in data. No two cardholders are the same, so their rewards shouldn’t be, either. For example, a recent graduate with a lower credit limit and a high earner should receive different offers based on their spending patterns. Issuers should create unique redemption offers by analyzing their cardholder behavior and habits.

Personalized rewards go beyond convenience—they’re transformative to the points program. The more meaningful the offer, the more likely it is to drive engagement and loyalty. When points feel valuable and personal, cardholders are more likely to use them.

Done right, personalization delivers key benefits across the board:

• Drives engagement: Personalized offers will encourage more frequent use.
• Builds loyalty: A well-timed reward fosters a stronger relationship between cardholders and issuers.
• Maximizes value: Targeted promotions ensure maximum ROI for issuers while enhancing the cardholder experience.

 A vision for the future: Points as currency

The loyalty industry is at a pivotal moment. Just as cashback transformed debit card rewards, a reimagined pay-with-points model can change how consumers spend, how issuers compete, and how merchants participate in the loyalty economy. Here’s what that future looks like:

• Points will rival cash in everyday spending: Consumers will have greater flexibility as points become as practical and versatile as cash.
• A seamless pay-with-points model will set issuers apart: Those that adapt will encourage greater program engagement, helping them win that coveted top-of-wallet status.
• Smaller merchants will finally benefit: Removing the POS barrier will create new opportunities without excessive costs.

The resurrection of loyalty points is underway. With the right technology, these rewards can become a real currency that’s personalized and accessible. A 2024 study by McKinsey found that 76% of consumers feel frustrated when loyalty programs don’t offer seamless, real-time redemption options. Meeting this demand could fundamentally transform how consumers and merchants view rewards.

Loyalty programs are at a crossroads. Brands that act decisively—offering real-time solutions, embracing personalization, and breaking down accessibility barriers—will redefine the industry. This isn’t about keeping up; it’s about setting a new standard where rewards hold the same power and versatility as currency.