Cashback is often seen as the go-to redemption choice in loyalty programs, and it’s easy to understand why. It’s simple, familiar, and popular with cardholders. But is it a better option than point-of-sale redemptions? Not necessarily.
While cashback has advantages, having a cashback-only program can actually work against your institution’s long-term goals. Let’s explore why integrating cash-like redemption options, such as point-of-sale redemptions, alongside cashback redemptions is a smarter, more cost-effective move that still delivers a great cardholder experience.
The Hidden Costs of Cashback
Cashback has a nearly 100% redemption rate, meaning cardholders use it almost every time. While that sounds like a win, it’s expensive. Banks and credit unions that rely on automatic cashback or cashback sweeps miss the chance to tailor rewards to their most engaged cardholders. This blanket approach not only drives up costs but also fails to foster meaningful connections with cardholders.
Compare this to point-of-sale redemptions, which can offer a similar experience but at a lower cost, while also introducing more flexibility in how and where cardholders can use their points. Offering cash-like redemption options alongside cashback lowers the costs for the institution while providing a valuable opportunity to connect with cardholders.
Cashback Lacks Emotional Connection
Cashback is purely transactional—cardholders earn, redeem, and move on. But where’s the connection? Loyalty programs aren’t just about rewards but about creating a lasting relationship with your cardholders.
When consumers engage with point-of-sale redemptions, they’re interacting with your financial institution at critical moments. Every time a cardholder redeems points at the pump, grocery store, or for a travel experience, they’re reminded of the value your brand brings into their everyday lives. Those touchpoints strengthen the relationship and build loyalty in a way that simple cashback programs struggle to do.
Not a True Loyalty Driver
Here’s the kicker: consumers are more likely to switch card providers if they see a higher cashback offer. Loyalty shouldn’t be about who offers the most cash—it should be about which brand offers the most value and engagement. Point-of-sale redemptions allow your institution to create that value by offering flexibility and personalization.
Point-of-Sale Redemptions: A Better Experience for Your Cardholders
Point-of-sale redemptions aren’t just cost-effective—they offer real-time engagement at moments that matter. Imagine a cardholder paying for groceries or filling up their car and instantly redeeming points to offset their purchase. That’s a seamless, satisfying experience that also happens to include your financial institution’s branding. You’re not just a silent partner in the transaction; you’re a visible and valuable one.
Even better, these redemptions allow cardholders to choose how they use their points—from everyday essentials to meaningful, memorable experiences. This freedom of choice increases cardholder satisfaction and deepens their connection with your brand.
Cardholders Want More Options
While cashback may seem like the most popular redemption option, research tells a different story. According to Marigold, 70% of cardholders surveyed said they highly valued loyalty programs with a broad range of redemption options. That’s a huge opportunity for banks and credit unions to engage cardholders on a deeper level by offering diversified redemption choices.
The Case for Point-of-Sale Redemptions
At ampliFI, we recently evaluated the impact of our Pay With Points feature for clients who had previously only offered cashback. The results? Impressive.
✅ 5% increase in purchase volume (card spend)
✅ 10% boost in card retention rates
✅ Cashback redemptions dropped by 54%, while Pay With Points redemptions rose by 53%
By introducing point-of-sale redemption options, these clients not only reduced the costs associated with cashback but also saw increased cardholder engagement and loyalty.
Move Beyond Cashback: Build Loyalty with Real-Time Rewards
While cashback is familiar, it’s not always the most strategic choice for banks and credit unions. Point-of-sale redemptions offer a more flexible, cost-effective, and engaging solution to help you build lasting relationships with your cardholders—without breaking the bank.
ampliFI’s Real-Time Rewards allow cardholders to use their points instantly at checkout for purchases that matter most. With options like Pay With Points, Checkout With Points, and Fuel With Points, cardholders can seamlessly apply their rewards to everyday purchases—whether it’s groceries, online shopping, or filling up at the pump. These redemptions happen in the moment, offering convenience and a branded touchpoint that keeps your financial institution front and center in their experience.
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Source: Marigold