A customer completes their shopping and is ready to pay. In the half second before they tap their card, they make a decision: use their points, take cash back, or pay as usual. The scenario is so common these days that the customers barely notice the decision they are making at the moment. But what the customer is not seeing is that behind that moment, an entire infrastructure shift took place. A shift that is moving loyalty from a marketing decision and into a consumer’s everyday payments stack.
For decades, payment technology and loyalty programs operated as separate systems, run by two completely different teams. This separation led to different roadmaps driven by different goals. As Pay with Points (PwP) grows to become the go-to selection at checkout on everyday purchases and not just on aspirational items, the technology decisions that used to belong to loyalty and marketing teams are now being made by payments leaders.
Pay With Points Only Works When It Lives Inside The Payment Flow
The early years of loyalty redemption would pull the customer from their transaction to redeem in a separate portal, in some cases a separate login entirely. This friction caused a reduction in usage and needed to change. The programs experiencing success today are the platforms that embed points and redemption directly into the payment flow itself. A place where loyalty redemption is happening at the same moment as the POS.
This shift is not representing just a cosmetic difference; it’s answering the evolution of how consumers operate through a transaction today. When points behave as a form of currency at the POS, more customers will utilize them. For retailers still behind in this evolution, the value is clear, it needs to be available exactly where the transaction happens, or it won’t get used at all.
The Technical Complexity Now Sits With Payments, Not Marketing
It is at this point when the organizational chart begins to shift. Marketing departments have historically owned loyalty strategies as a model to pull in new customers and retain existing ones. Everything from the points structure and redemption tiers to the customer messaging. This has changed. PwP functioning at checkout requires capabilities that marketing teams are not capable of: integration across POS systems, digital wallets, processors and issuers, all without disrupting existing payment rails.
That capability lies with engineers on the product front, those who tackle payments and IT. As loyalty technology evolves to become more technical and entangled within the payment stack, payment leaders have earned their seat at the table to make the important loyalty roadmap decisions. This is a collaboration to recognize where the operational complexity and operational risk actually live.
Integration Is The New Competitive Battleground
The retailers taking the lead are the ones who learned to solve integration seamlessly. The ones that learned to connect loyalty technology at the POS, wallet, processor and issuer systems without an entire overhaul. This distinction is the difference between production and go-to-market. A retailer that has to rip out its existing payment infrastructure to add PwP will move slower, spend more and frustrate customers along the way.
With customers holding retailers to a higher standard, moving slowly is not an option. Points need to work the same way online, in-store and in-app, without the customer having to remember which system they are operating. Meeting that bar requires infrastructure decisions, not marketing decisions.
The top strategies bring payments and IT into the loyalty roadmap discussion early on. Through this strategy, loyalty technology is evaluated based on payment infrastructure requirements allowing redemption to be designed around the transaction rather than a separate loyalty experience. The convergence of loyalty across marketing, product, payments and IT departments creates a shared roadmap and can ensure programs work consistently across online, mobile and in-store. Bring Payments and IT into loyalty roadmap discussions earlier.
The New Buyer For Loyalty Technology Is Payments
Put those pieces together and the procurement shift becomes obvious. If loyalty redemption is currency and utilized as a payment functionality tool, then loyalty technology has to be evaluated the same way payments infrastructure is evaluated, by integration depth, security, uptime and how it sits inside an existing tech stack. Marketing still owns the customer proposition, engagement and loyalty strategy, while Payments and IT leaders are increasingly influencing the technology, integration and execution layer.
The convergence here might be early, but the roadmap direction is clear. Loyalty is no longer a marketing program layered on top of the transaction to retain customers. Loyalty is becoming a payment utility that is part of the transaction itself. Payments isn’t replacing marketing in loyalty, it’s becoming an equal decision maker because loyalty is now embedded in the transaction. The retailers and issuers recognizing this transformation and welcoming their payments leads to be at the table will set the pace for the next stage of the industry. The future of loyalty won’t be built beside the payment experience. It will be built inside it. Everyone else will be retrofitting.
Nick Relph
VP Client Success & Head of Marketing
