Gen Z Wants New Models for Loyalty and Payments

Let’s face it—most retail loyalty programs were built in a different era. An era where credit cards reigned supreme.

But Gen Z?

They’re not buying into credit and the debt that comes with it like previous generations did.

Nearly 70% of Gen Z use a debit card every week. Not only do many of them not have credit cards, they don’t even want them. They’re choosing real-time money management over revolving credit, and honestly, who can blame them?

But here’s the problem: most brand rewards programs still hinge on credit spending. And that creates a massive opportunity brands are overlooking.

And it’s not just a “young people thing” anymore. This debit-first mindset is spreading fast across generations, fueled in part by record-high credit debt of $1.2 trillion in August 2025. Yet, loyalty systems are stuck in the past, excluding millions of engaged customers simply because of how they choose to pay.

That’s a big blind spot.

Sure, debit purchases tend to be smaller—but they happen more often. Brands that only focus on big credit swipes might be missing out on frequent spenders who are just as valuable, if not more so, over time.

Wyndham Hotels Makes a Bold Move

Take hospitality, for example. Wyndham Hotels & Resorts made a bold move recently by launching the first national debit rewards card tied directly to their loyalty program—no credit check, no strings attached. Just benefits for how people actually spend. It’s a smart signal that things are shifting.

The takeaway? Loyalty needs a reset. Programs that only reward credit spending risk alienating customers, especially younger ones who are looking to build loyalty with brands that fit their lifestyle.

Understanding Gen Z and Their Loyalty Preferences

Now, if we rewind a bit, the reason we got here makes sense. Traditional loyalty systems were born during the credit boom. Brands partnered with card networks because it was easy to track spending and offer perks. But that model was narrow. It equated spending power with loyalty, and that’s not the full picture.

Here’s where it gets deeper: this isn’t just a payment issue. It’s a cultural one. Gen Z expects brands to understand who they are, how they live, and what they value. Ignoring how they pay? That sends a not-so-subtle message: your loyalty doesn’t count.

And loyalty isn’t just transactional—it’s emotional. When brands build systems that exclude debit spenders, they’re not just missing revenue. They’re missing the chance to connect into an entire generation. Gen Z has little attachment to the legacy brands that were once mainstays of the industrial era. They gravitate toward digital-first, experience-driven brands that align with their values—bucking the loyalty patterns of previous generations.

Debit Rewards are Back

So why haven’t more companies made the shift? In the past, debit rewards programs struggled. Not because consumers didn’t care—but because the economics were tough. Interchange fees were low, and the tech to support real-time engagement wasn’t quite ready.

But those barriers are gone. API-driven platforms can connect rewards to all kinds of payments—credit, debit, mobile wallets—you name it. Brands can finally offer personalized, instant benefits based on how people actually spend.

And no, brands don’t have to become banks to pull this off. But they do need to recognize that embedding financial tools into the customer experience is no longer optional. It’s how you build trust. It’s how you build stickiness. And increasingly, it’s how you reduce friction in the purchasing experience.

Inclusive loyalty strategies don’t just feel good; they make business sense. Debit-first consumers may spend less per trip, but they show up more often. They stick around longer. And when they feel valued, they advocate for your brand and mature alongside it.

If you want lasting customer relationships, loyalty must go beyond spend alone, accounting for how often customers engage, the emotional connection they feel, and whether they believe they belong. Including debit in your rewards strategy reinforces that you value customers and their choices, helping to build loyalty that lasts.

Because in the end, true loyalty isn’t about flashy perks or big purchases. It’s about trust. And in a world overflowing with choices, trust is everything.