A novel approach challenges the assumptions behind card-linked loyalty and reveals what’s next for brands and consumers

Loyalty is a proven catalyst for behavioral change, yet its true potential is often constrained by limitations of traditional loyalty technology. In today’s landscape of precision marketing and instant gratification, loyalty can no longer be treated as an afterthought. The legacy ‘set-and-forget’ model is increasingly out of step with consumer expectations, and it shows.

This shift is particularly evident in the development of payment-linked loyalty programs. According to a 2023 report by Bond Brand Loyalty, 79% of consumers say loyalty programs make them more likely to continue doing business with brands, yet actual engagement often lags. A PYMNTS study found that only 43% of cardholders had used card-linked offers in the previous year, despite widespread availability.

The original generation of card-linked programs, pioneered by platforms like Cardlytics in 2007, was built to reward customers passively – link a card once, pay as normal, and reap benefits. While conceptually elegant and remarkably innovative at the time, these systems have struggled to deliver incrementality and reliability. Many brands still wrestle with delayed rewards, limited payment compatibility, and inability to support redemptions.

After nearly two decades, card-linked offers still fall short of expectations. A new paradigm is emerging that embeds loyalty directly into payments. BLUE OCEAN LOYALTY is disrupting this space with real-time customer recognition, instant personalized rewards, and clear sales attribution across multiple use cases.

The Card-Linking Conundrum

Card-linked loyalty programs were a breakthrough idea when introduced. The idea was simple: link your card once, spend as usual, and watch rewards accumulate. On the surface, this offered the promise of convenience, automated value without the need for extra apps or manual scanning.

Early research affirmed the potential. A study published by Swiss based MDPI Group showed that card-linked programs delivered both tangible and intangible benefits. These included faster transaction times, higher consumer satisfaction, and even a perceived sense of privilege for participants. Merchants also stood to benefit through new customer acquisition, increased average transaction value, and visit frequency – helping get new customers rather than cannibalizing margins on existing ones, encouraging higher spend and repeat visits through strategically designed, gamified offers.

After seasoning in the marketplace, the model revealed critical limitations that reduced its long-term viability.

• Unreliable, Delayed Rewards: The challenge with card linking is that reward delivery is neither reliable nor instant. While consumers might accept delays if rewards were guaranteed, the current system offers neither certainty nor speed.

• Redemption Friction: Even when rewards are earned, redeeming them is often difficult or requires additional solutions involving gift cards, point-of-sale integrations, or statement credits, adding friction for both consumers and merchants.
• Network Constraints: Most card-linked systems operate within closed payment ecosystems. Card-linked systems face coverage limitations, as they either exclude growing payment methods like mobile wallets or require multiple integrations for a comprehensive market reach.
• Cannibalization of Organic Sales: This represents the biggest challenge for sponsoring brands/merchants. It’s practically impossible to distinguish truly incremental purchases from baseline behavior, unnecessarily rewarding organic spend rather than incentivizing targeted, incremental engagement.
• Low Customer Adoption:  According to industry data, while 73% of cardholders say they prefer linked offers, only 41% used them in the past year. This low adoption reflects limited merchant participation and offer relevance, as established merchants frequently avoid card-linked programs due to their inherent limitations.

This underscores the need for loyalty-based marketing that balances rewarding long-term customer relationships with driving measurable incremental purchase engagement.

A Shift Toward Embedded Loyalty

Loyalty-Embedded Payments offer a fundamentally different approach. Instead of bolting loyalty onto a checkout experience, loyalty and performance marketing are built seamlessly into the payment itself, creating instant, reliable, flexible interactions with clear and measurable sales impact.

The earliest examples of this model are traditional issuer and co-branded credit cards, which first embedded loyalty directly into payments.

• Banks used either their own loyalty currency (e.g., AMEX Membership Rewards, Chase Ultimate Rewards) or issued a partner brand’s currency (e.g., Chase United MileagePlus) in a co-branded model.
• In both cases, rewards are essentially funded by merchants through the card fees paid by them, not by the card issuer.
• Interchange caps already in force in Europe (since 2015) have expanded to Australia, New Zealand, and North America, diminishing the prospect of funding rewards through interchange revenue in the future.

In addition to funding scarcity, these models also face scalability challenges, as credit card issuance depends on customer creditworthiness, challenging the limits of their distribution.

By contrast, modern Loyalty-Embedded Payments can be offered at scale without credit checks and with sustainable funding driven by merchants who opt-in to engage their target consumer segments. Merchants control the associated incentives – whether instant discounts, cashback or loyalty points and miles – as well as promotions, representing the next generation of payment instruments designed for the future of loyalty and performance marketing.

An emerging example of this embedded loyalty model is created by BLUE OCEAN LOYALTY, which is introducing a white-label platform built to support real-time engagement within the payment experience. The platform is designed to support:

• Flexible Payments: Consumers can pay with any card or wallet, either alone or in combination with loyalty redemptions from participating programs, as they prefer.
• Instant, Reliable Rewards: Consumers enjoy benefits immediately upon payment.
• Dynamic Personalization: Offers are tailored to consumers based on location, behavior, context and an expanse of other data-driven personalization criteria – guided by brand and merchant intent.
• Seamless Merchant Activation: Loyalty-Embedded Payments can be activated instantly on existing payment terminals without any incremental integrations for merchants.
• Clear, Undeniable Attribution: Merchants can track every sale back to the performance marketing partner and campaign that initiated the conversion.

This approach creates what BLUE OCEAN LOYALTY refers to as “instant, effortless rewards with clear attribution”.

Lansy Joseph, CEO of BLUE OCEAN LOYALTY told Wise Marketer “Consumers now expect rewards to be immediate, relevant, and effortless. At the same time, merchants need control over their payment costs and marketing investments, with clear visibility into the value delivered to customers and the incremental sales generated.”

It’s important to note that in the legacy model, merchants unknowingly fund rewards, whether through premium interchange fees or additional card-linked offers – without any visibility into the benefits their customers receive or whether sales were truly incremental.

While consumers may earn extra points for paying with a costly card, merchants remain in the dark about the value delivered. This lack of insight and attribution makes it increasingly difficult to justify merchant-funded rewards, especially in capped or fee-sensitive markets.

Exploring the Two Use Cases: Daily and Destination Rewards

What makes BLUE OCEAN LOYALTY’s solution particularly versatile is its flexible, multi-segment applicability:  Here is how.

1. Daily Rewards

BLUE OCEAN LOYALTY supports rewards programs designed for daily relevance. From groceries to fashion, consumers earn and redeem value across a merchant network, encouraging repeat visits and long-term loyalty.

The ability to cater to diverse consumer groups, yet personalized for each consumer, guided by each brand’s intent and leveraging a common, interoperable infrastructure, makes the platform and its technology uniquely adaptable and strengthens merchants and local economies.

2. Destination Rewards

Their Destination Rewards product is tailored for tourism and travel ecosystems. It connects global travelers with local businesses and manages onboarding, discovery, and rewards in one seamless, digital experience.

Hosts (like tourism boards, airlines, hotels, travel eSim providers, airports and OTAs) have crucial data and insights on travellers that can be used to connect visitors with relevant local businesses. The platform also enables them to leverage this data to engage and reward visitors in the destination, crafting memorable journeys.

This not only boosts visibility for local businesses, driving footfall and incremental visitor sales with clear attribution, but also generates valuable behavioural insights that each host can then use to steer future growth.

Visitors are recognized and rewarded for their patronage via seamless, personalized benefits when simply paying.

Rethinking Loyalty’s Role in Commerce

As loyalty programs evolve, a critical distinction is emerging between platforms that layer rewards on top of the checkout experience and those that embed engagement into the payment experience itself.

Historically, loyalty has functioned as a peripheral system, triggered post-transaction through card-linking, receipt scanning or third-party tracking. These approaches introduce delays, limit visibility, and often rely on external networks to validate spend and issue rewards. Enabling redemptions adds friction for both merchants and consumers, often involving gift cards, point-of-sale integrations, or statement credits, which limits program engagement.

By contrast, embedding loyalty directly into the payment layer restructures the entire engagement model – it’s built for purpose, rather than just a bolt-on workaround.

This architecture enables:

• Real-time consumer recognition, reward issuance and redemption
• Integrated campaigns with full autonomy and independence, delivering reliable and instant results
• Unified customer and spend data across all channels and payment methods.

The shift is simple from a customer experience perspective yet powerful; loyalty is no longer a bolt-on or an afterthought at checkout, it becomes a native function of how customers are recognized and rewarded for their engagement and loyalty.

For hosts and merchants, this unlocks a new level of agility, insight, and accountability. Rather than adjusting around legacy infrastructure, they gain a foundation built for responsiveness, scale, and operational clarity.

The Bigger Opportunity: Making Other Models Redundant

Perhaps the most compelling outcome of this model is its potential to disintermediate legacy solutions that have long overdue reached the limits of their original design.

Lansy Joseph confirmed, “The future of loyalty lies in seamless, real-time recognition and instant gratification. By embedding loyalty directly into payments, BLUE OCEAN LOYALTY has created a system where every interaction counts — where rewards are instant, and brands can truly understand and influence customer behaviour, driving incremental sales while delivering meaningful value to consumers.”

BLUE OCEAN LOYALTY’s approach challenges the core assumptions behind card-linked systems:

• Do you need a specific card? No.
• Must users take extra steps? No.
• Is attribution difficult? Not anymore.
• Can rewards be delivered in real time? Yes.

In an industry shaped by incremental fixes, Loyalty-Embedded Payments offer a unified framework designed for flexibility, incrementality and accountability.

To make Loyalty Embedded Payments come to life, BLUE OCEAN LOYALTY has created a platform that is disruptive to the traditional card-linked models and offers brands the flexibility and promise required for the next wave of loyalty innovation.

In short, this shift represents more than new tech. It represents a new foundation for loyalty, payments and performance marketing. In that sense, the most important loyalty innovation of the next decade may not be a new points structure, gamified app, or wallet partnership.

It may simply be this: recognizing and rewarding consumers – flexibly, seamlessly and instantly – as they engage.