The Loyalty Game Gets Smarter With Co-Branded Card Precision

Co-branded credit cards are having a moment as merchants see the value in branding and stronger customer relationships.

However, their true value also lies in how much they fuel today’s high-stakes loyalty wars.

Concora Credit Chief Commercial Officer Rolando De Gracia told PYMNTS the first rule is simple: Every player must win in the same way.

“What really matters for both parties is that you have alignment of incentives, like everything else,” he said. “We start the marriage with a solid foundation of knowledge. We make sure [partners] understand who this customer is and how they can create value with potentially different product descriptions. If the goal is something else that is not breadth of program, then the partnership will be hindered because if you start with the wrong objectives, it’s tough to correct that later.”

Those objectives loom larger as consumers juggle inflation and shifting priorities. Concora serves largely near-prime and non-prime borrowers, and De Gracia said loyalty programs are taking a bigger role in that environment. The consumer is continuing to spend but cutting back on non-discretionary spending. In that atmosphere, a generous, visible reward can preserve brand loyalty even when purchase timing slips.

“Therefore, if you have the choice of buying from retailer A or retailer B… the acceleration of that discount or the acceleration of that benefit will drive your behavior,” he said. “People become more value shoppers. A strong loyalty card-based program will help shift or maintain some of that spend. It may get delayed, but you can still conserve that piece of the wallet.”

The problem is many merchants have access to points, tiers and exclusivity. Technology can sharpen the message only if issuers resist piling on perks no one remembers, De Gracia said.

“Most of the partners of the banks have now very sophisticated digital engagements with their consumers,” he said.

But a phone only has so much digital space, and a consumer can’t have an app relationship with everyone.

A brand that a customer visits “three to five times a year” can’t expect to track complex thresholds, he said. By contrast, “there’s something to be said for 5% cash back at Amazon if you’re a Prime member. It’s easy to remember.”

Loyalty initiatives can sour quickly if issuers and merchants stop asking whether new wrinkles actually change behavior. Equally important is an open line with the brand.

“Constant education and discussion is key,” De Gracia said. “Otherwise, you find yourself four months later that you’ve lost the vein of your partner.”

That means gathering intelligence on where 10 proposed program tweaks may yield value, but also where seven can safely wait.

Technology is also redrawing how and where loyalty touches the customer. Virtual card numbers, mobile wallets and tokenized credentials enable real-time rewards, but they fight for attention inside new “super apps,” he said.

“It’s very difficult for you to get mind share or phone share when you have these big aggregators,” he said. “When I want to order a coffee, I do it out of Google Maps. The challenge [is] how to deliver a program through a relationship with the consumer” rather than forcing yet another standalone app.

Even cutting-edge payment tools must solve a bigger problem than form factor.

“Consumers are not solving a problem of, ‘I want to pay with a virtual card,’” De Gracia said. “They want to solve, ‘How do I get the best deal, the best discount, with a product I want in the next 10 minutes.’”

Issuers that see virtual cards as an end in themselves risk irrelevance, he said. Those that embed the benefits like fraud protection, instant credits and personalized offers into the broader shopping journey will keep the card top-of-wallet even when plastic never leaves the pocket.

De Gracia, who has more than two decades in the loyalty and co-brand space, said co-branded credit cards remain one of the few instruments that let merchants reward loyalty at the exact moment of payment while giving banks a direct line to incremental spend. In an economy where every swipe is scrutinized, that alignment becomes mission-critical.

Programs that succeed will be built on unambiguous incentives, stripped-down value propositions the customer can recite from memory, and a test-and-learn cadence that evolves as quickly as consumer behavior, he said.

“If you can get those two things solid — design transparency and a team that knows how to align on the brand message — that is a successful partnership,” De Gracia said.

For issuers and merchants in the loyalty game’s next chapter, simplicity — and shared purpose — will win the points race.

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