Agentic AI and Tokens Make Loyalty Programs Personalized, Automated Drivers of Commerce

Agentic agents, automated payments and consumer-permissioned, data-rich tokens will transform loyalty and rewards — moving beyond the merchant-by-merchant siloed experience that is the hallmark of those programs today.

In the report “Beyond Points and Perks: How Relevant Benefits Drive Cardholder Engagement,” a collaboration between PYMNTS Intelligence and Banyan, we found that 46% of cardholders proactively earned rewards and then used them. The logic follows that if those rewards were “surfaced” as consumers traversed in store and online settings, the “hunt” for those rewards would fall by the wayside, and the active use of the card would increase.

According to the study, 75% of cardholders indicate that ease of access makes card-linked offers more appealing or relevant, while 74% say the same about personalization. Cardholders who redeem for specific items through the card issuer’s program redeem offers more frequently, which is a boon for both issuers and merchants.

But the gulf between finding those rewards and using them is significant — about 30% of frequent credit card users redeem rewards, cash back or points from their primary credit card accounts at least once a month. 

That leaves a vast majority of frequent card users who aren’t coming face-to-face with those offers in the right context at the right time.

Recent announcements by the payment networks have spotlighted the use of agentic artificial intelligence (AI) and tokenized credentials to make payments more secure. But the move integrating payments functionalities into the AI platforms also embeds a wealth of additional, consumer-permissioned data into the mix that can fine-tune, personalize and even automatically redeem those offers so that merchants gain incremental sales, the issuers get a boost in repeat card use, and the cardholders no longer have to hunt and gather their rewards.

As PYMNTS CEO Karen Webster wrote in a recent column, “An emerging Agentic AI commerce ecosystem now stands at the ready to help advance their ambitions. Card networks, payment processors, FinTechs and AdTech startups use tokenized credentials and established payment infrastructure to collapse the traditional browse-select-purchase journey into a natural conversation capable of making a sale.”

The process of tokenization entails replacing the 16-digit personal account number (PAN) with a unique code. The token can also be used as a conduit for a wide range of data and information about the consumer (and can be permissioned) to be conveyed throughout the commerce ecosystem.

The explosion of those credentials can be seen in the payment networks’ most recent earnings results, released in the last few weeks. Visa, for example, noted in its March quarter report that during the period, credentials grew by 7% year on year to a recent 13.7 billion tokens. Roughly 50% of eCommerce transactions are tokenized. Mastercard’s management said in its own discussion of results that 35% of switched transactions are tokenized.

PYMNTS reported last week that Visa had unveiled its “Intelligent Commerce” application programming interfaces (APIs) and partnership program that, among other things, use agentic AI and AI-enabled tokenized cards to share permissioned basic spend patterns so the AI agents can rank offers by preferred airline, hotel-price comfort zone or dining habits.

Mastercard’s own Agent Pay offers programmable parameters, which also can include rewards and discounts. For the issuers — the payment networks and the banks — the secure link between the tokenized data, the transaction and the various stakeholders can enhance the effectiveness of loyalty programs as cards are used more frequently, which benefits the issuers.

PYMNTS Intelligence, in collaboration with Banyan, has spotlighted the increasing competitive advantages gleaned from offering the right rewards at the right time to cardholders. As loyalty members’ spending habits change, so too can the rewards; the parameters they set (redeeming offers for specific types of spending such as travel, or at certain spending threshold) automates the process.

Tokenized loyalty points can also travel with customers throughout their commerce journey, and can be fungible, as they can be redeemed across, say, marketplaces or at participating merchants and brands. In this way, the loyalty programs are tied more closely to the cards and the network — and to the cardholders themselves — rather than specific merchants.

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