Debit has become the primary way a growing share of consumers pay — yet most brand loyalty investment still flows to credit programs. In a recent PaymentsJournal webinar, three payments leaders unpacked why co-brand debit is back, whether the economics hold up, and what it takes to build programs customers actually use.
Key takeaways
Co-brand debit collapsed after the 2010 Durbin Amendment. It's back because consumer behavior shifted and the technology to launch fast finally caught up.
The economics are thinner than credit, but real — and debit's daily use creates far more chances to deepen loyalty.
Debit isn't cannibalizing credit. The data shows the two serve different customers and different moments.
The next phase is smarter rewards: personalized, real-time, and built around the behavior brands want to drive.
Why is co-brand debit making a comeback?
Airlines led the first wave of co-brand debit, but most of those programs shut down after the Durbin Amendment capped debit interchange for larger banks in 2010. For more than a decade, the category went quiet.
Two things changed. First, consumer behavior. Debit never stopped growing — especially among younger shoppers — and in many categories it now outpaces credit. Nearly 70% of Gen Z uses debit regularly, and that preference isn't fading. Second, the technology caught up.
Paul Dunning, who leads brand business development at SoFi Tech Solutions, remembers the old model well. "I'm an individual that had one of those airline debit programs pre-2010, and my experience at that time was you take time off work, you go into a branch, you fill out a form, you get that card a few days or weeks later," he said.
Today, a consumer can get an acquisition email, sign up, get approved, provision the card to their wallet, and start spending in minutes. That shift — from branch visits to instant issuance — is what brings these programs back within reach, and it all runs on modern card issuing and processing platforms.
Do the economics of debit rewards actually work?
It's the first question most brands ask. Debit interchange is capped, so per-transaction economics will never match credit. But thin isn't the same as unworkable.
How to Design a Co-Brand Debit Card Customers Will Use Every Day
Debit gets used every day, and that volume adds up. Most brands underestimate how much of their spend already runs on debit. "Every client we've worked with... we said we'll take the over on whatever you think it is. And it's there," said Dan Dougherty, Partner at Marketgate Advisors.
The bigger return is engagement. Jonathan Clarkson, Founder of Carlisle Advisory and former Chief Product Officer at Southwest, put it plainly: the customers who carry your card tend to be your most engaged customers. "They tend to buy the premium products. They tend to have more frequency for the brand than less engaged customers," he said.
And the fear that debit would eat into credit? The data doesn't back it up. "You have significant populations of engaged loyalty members who just want to use debit, and they weren't going to use credit today," Dougherty said. Debit and credit serve different people and different occasions — so a well-built co-brand debit program complements credit instead of competing with it.
What do ‘smarter rewards’ look like?
The panel agreed the next phase of co-branded debit reward isn't about giving away more. It's about giving smarter.
"The future isn't bigger rewards, it's smarter rewards," Dunning said. In practice, that means personalized rewards by spending category, real-time offers, and reward fulfillment customers can actually watch happen. It also means a tighter connection between the card, the app experience, and the loyalty platform behind it.
Because the platform captures real behavior, brands can test, learn, and adjust quickly. AI raises the ceiling further, matching the right reward to the right customer at the right moment. For program owners, that's a blank canvas — room to design a distinct product with day-of-travel benefits, loyalty accelerators, and offers that reinforce the bond between brand and customer.
You can see the model at work in programs like the Wyndham debit rewards card, which brings earn-and-burn functionality directly to everyday debit purchases.
Where does co-brand debit go from here?
Early on, many brands saw debit as a down-sell — a consolation for customers who couldn't qualify for credit. That framing is fading fast.
"We're working with a number of brands and they don't see this as a one-off, niche product. It is part of their overall strategy," Dougherty said. The signal to watch, the panel agreed, is the move from enrollment to engagement: not just how many people sign up, but how heavily they use the card.
Clarkson offered a simple yardstick — track your share of transactions on debit versus credit. If overall debit usage grows without pulling from credit, the program is working. And with nearly 70% of Gen Z already debit-first, and Gen Alpha close behind, the audience is only getting bigger.
Over time, the line between debit and credit may blur into a single financial suite — prepaid, secured credit, and more, offered through one experience. Getting there starts with the digital banking infrastructure underneath.
How SoFi Tech Solutions helps brands launch
Building a co-brand debit program the old way could take more than a year. SoFi Tech Solutions brings that down to a few months by combining card issuing and processing, Cyberbank Digital, and program management on one configurable platform — so you're not stitching together disconnected systems. With 20+ years powering payment and banking programs, we help airlines, hotels, and brands reward the spend their customers are already making.
Click here to watch the full webinar.
Ready to turn everyday debit spend into lasting loyalty? Explore our co-brand debit program to see how quickly your brand could get to market. Then drop us a line to learn more.
Frequently asked questions
It's a branded debit card that lets customers earn rewards on everyday debit spending — perks that used to be reserved for credit cardholders. Brands use it to deepen loyalty and reach customers who prefer or rely on debit.
The data from recent launches says no. Debit and credit tend to attract different customers and serve different moments, so a well-designed debit program complements credit rather than competing with it.
Yes, though they work differently than credit. Debit interchange is capped, but daily transaction volume, cost controls, and stronger engagement make the model viable — often generating more than brands expect.
Traditionally, more than a year. On the SoFi Tech Solutions platform, brands can often launch faster using integrated card issuing, digital banking, and program management instead of separate systems.
Airlines, hotels, retailers, and other consumer brands with active loyalty programs — especially those reaching younger, debit-first customers like Gen Z.
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