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Unlocking the Power of Digital Programmable Rewards for Next-Level Customer Engagement


Digital programmable rewards can improve customer experience and loyalty.

In the digital era, personalized experiences rule. For fintechs and brands operating in saturated markets, this presents the need for a novel way of standing out, increasing customer loyalty, and improving lifetime customer value. Many brands are turning to rewards cards to meet this need. But legacy technology and rapidly changing consumer preferences often hamper efforts to launch and scale rewards programs.

Brands must overcome these challenges if they want to compete. A recent PYMNTS and ACI Worldwide report notes that 79% of general retailers believe that digital coupons and rewards are so important, consumers would be very or extremely likely to switch merchants if they weren’t provided. 

Modern credit card operating systems enable this by allowing fintechs and brands to quickly launch and scale personalized rewards cards that improve the customer experience while  encouraging repeat business. We’ll look at the economics of both historic and modern credit card programs and highlight novel examples of how credit cards are spurring next-level customer engagement and business growth for companies of all sizes across all verticals. 

What are Digital Programmable Rewards?

Digital programmable credit card rewards include incentives that can be tailored and customized to meet the specific needs and preferences of individual customers. These are categorically different from traditional, “one-size-fits-all” rewards programs that offer flat cash back, points, discounts, and more. 

With advanced digital technology, rewards can be tailored for each customer, enabling even small businesses to issue smaller batches of credit cards that can significantly boost engagement and loyalty among customers. 

Most rewards programs have some manual element to redemption. A cardholder may need to take a photo of a receipt and submit it or take another action to redeem rewards. In many cases, the card issuer bakes in this type of friction to discourage redemption and reduce program costs.

Today’s cardholders are not willing to wait — and they are no longer sated by run-of-the-mill credit card rewards. To differentiate, fintechs and brands must create innovative, frictionless, automated rewards that excite cardholders. 

Understanding the Economics of Credit Card Rewards 

To understand the economics of credit card rewards, it’s necessary to define key terms: 

Interchange – Also called a “swipe fee,” this is a small percentage of the transaction amount that is paid to the card issuer (often a bank) by the merchant at which the card is used. 

Fees – Many rewards cards charge annual fees and may also charge foreign transaction fees, balance transfer fees, and interest fees on balances that carry over from month to month. 

Breakage – Recognized revenue that a customer pays for but doesn’t use. While commonly applied to gift cards, it applies to credit card programs as well. Since rewards are stores of value a customer gets from using a credit card, breakage occurs when those stores of value (points, miles, etc.) expire or are otherwise not used.

The profitability of credit cards is largely tied to the net credit margin (NCM), which is the difference between the finance charges paid by borrowers and the cost of funding revolving balances. Generally speaking, this makes up roughly 80% of profitability. When cardholders don’t redeem rewards, it can increase the profitability of credit card programs for issuers.

In other words, some may view breakage as a component of profitability. It’s not hard to see why; results of an online survey by LendingTree and Qualtrics show that almost 70% of rewards cardholders are sitting on unused rewards — and 31% of those have at least $100 in unused rewards.

Bankrate's Money Pulse Survey results show that nearly one-third (31%) of cardholders -- over a whopping 60 million consumers -- do not redeem annual credit card reward points. These expired points generate over $16 billion in breakage annually, going straight back to the pockets of credit card issuers.

Modern credit card rewards programs, like those launched via Tallied, are designed for 100% redemption of rewards automatically.

Why? Encouraging rewards redemption with unique and highly customized rewards encourages behavior that drives the larger flywheel of the core business. When cardholders are pleasantly surprised and delighted by the rewards they receive, they increase engagement with the business that delivered them.  This increases loyalty, which increases customer lifetime value. 

And custom rewards can also drive the core business. A business may opt to offer end-of-life products as a reward for one month to clear the shelves, for example. Referral programs where both the referrer and the referred get rewarded are another way to broaden reach and sell more products.

How Programmable Rewards Make an Impact

There are many benefits to running a digital programmable rewards program:

Tailor-Made Rewards: With the right technology partner, credit card programs can develop personalized offers targeted to specific customers. This is ideal for smaller programs that want to create relevant rewards that are valuable to individual customers to increase engagement and loyalty. 

Automated Rewards Redemption: Programmable rewards make automated rewards redemption possible, so customers can automatically receive rewards and incentives. Not only does this simplify redemption and improve the customer experience, but it also bolsters engagement and satisfaction. 

Data Analytics: Credit card programs offer deep insights and data analytics that help businesses track customer behavior, spending habits, and preferences. This, in turn, can be used to optimize rewards programs, craft well-targeted marketing campaigns, and boost customer lifetime value. 

Credit card operating systems like Tallied enabled businesses of all sizes to launch and scale digital programmable rewards programs by democratizing access. Tallied is a one-stop shop for building, launching, and scaling a rewards program that uses digital signals and bespoke integrations to offer a brand’s customers frictionless rewards that they want to redeem. 

We can pull information from digital signals to drive automated rewards. For example, if a health brand wants to reward users for meeting their step goal, we can pull information directly from the health brand’s app and trigger automatic rewards for users. 

Video gaming is another industry ripe for this opportunity. Our technology can receive signals when a user achieves a level or spends a certain amount to trigger automatic, customized rewards (like a customized metal credit card featuring their avatar) or unlock additional levels in the game. 


For businesses looking to launch a credit card, digital programmable rewards are important because they provide a competitive edge in a crowded market. By offering customized rewards that meet the specific needs of individual customers, businesses can differentiate themselves from other credit card providers and build stronger relationships with their customers.

In addition, digital programmable rewards can provide valuable data insights into customer behavior, preferences, and spending habits. This information can be used to improve products and services, develop targeted marketing campaigns, and optimize rewards programs to maximize customer engagement and loyalty.

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