Co-branded debit:
The missing layer in modern loyalty
Traditional loyalty programs were built for a different era: The average traveler books 2–3 times a year. The average consumer swipes a debit card 40+ times a month. That gap is where loyalty goes to die and where co-branded debit steps in.
Why traditional programs are losing ground
Airline loyalty programs are driving fewer customer behavior changes.
Actions taken as a result of airline loyalty program membership, % of respondents
Changed at least one behavior
Chose company over other options
Increased frequency of spend
Top-of-wallet isn't guaranteed:
A branded credit card competes with every other card in a customer's wallet, but a debit card tied to their everyday checking account wins by default. Daily spending habits keep your brand visible 365 days a year, not just at the airport or hotel check-in.
OTAs are cannibalizing loyalty:
Third-party platforms have inserted themselves between brands and customers, capturing the booking action and diluting brand data visibility. Every intermediary-facilitated transaction erodes the relationship. Research shows that 36% of hotel room bookings were made through an OTA in 2023, compared to only 21% made through hotel-owned channels.
Credit-only loyalty leaves money on the table:
Co-branded credit programs reach only a subset of customers. Debit-eligible consumers, including younger, budget-conscious, and credit-averse segments, are largely excluded from earning and engagement.
What brands need is to provide their core customers with a daily-use payment instrument that makes every coffee, grocery run, and tank of gas feel like progress toward something the customer cares about.
The power of co-brand debit
Co-brand debit reframes the loyalty equation: instead of waiting for the next booking, brands earn relevance across monthly transactions that are already happening.
Everyday spend categories are a bridge:
Dining, groceries, transit, subscriptions, and retail, are where the card earns its place in the wallet. Rewards must visibly accumulate toward meaningful goals which adds brand value.
Rewards without the debt:
Debit lets cardholders earn on everyday purchases without carrying a balance — staying in control of their budget while still getting value from every swipe.
Data is the hidden asset:
Transaction data reveals lifestyle patterns and life events enabling precision personalization and ancillary revenue development.
Durbin-exempt advantage:
Programs structured through sub-$10B bank issuers can access more favorable interchange economics, supporting richer rewards without inflating program costs.
Who co-brand debit programs are for
For some time now, airlines and hotels have hamstrung the programs their most loyal customers built their travel habits around. Dynamic pricing made redemption values unpredictable by design.
Meanwhile, retailers face a different but equally corrosive problem: loyalty program saturation has rendered most reward offerings effectively interchangeable, leaving customers with little reason to consolidate spend on any single platform.
Across all three sectors, OTAs and competing platforms have moved into the gaps with simpler pitches focused on immediate affordability and convenience.
Travel:
With the miles model structurally compromised, card-linked incentives anchored to immediate, tangible benefits like exclusive rates, fee waivers, direct booking bonuses offer a credible alternative while redirecting booking volume away from OTAs and back into owned channels.
Hospitality:
Co-branded debit can help brands reclaim their customer relationships from OTAs by sustaining year-round engagement through rewarding everyday spend, generating transaction data OTAs cannot access, and creating in-property incentives like dining multipliers, room upgrades, spa perks that no third-party platform can replicate.
Online Marketplaces & Retail:
Retail loyalty hasn't suffered the same trust collapse, but faces a different problem: ubiquity. Brands in this space need to double down on value addition to ensure they remain relevant in a sea of sameness: co-branded debit cards that offer closed-loop redemption, category-specific multipliers, and perks like simplified returns and shipping discounts convert a generic rewards card into a reason to default to the platform over a competitor.
“Launching a co-brand debit program shouldn’t force tradeoffs between speed, control, and long-term value. Our turnkey platform enables brands to go live quickly while retaining full visibility into performance, economics, and customer engagement.
From day one, we focus on growth—designing a value proposition that turns everyday spend into an extension of your loyalty engine, driving engagement, strengthening data ownership, and generating durable revenue.”
“We partner across the full lifecycle—from building seamless, brand-first digital experiences to activating cardholders in the first 90 days with proven strategies that drive spend and retention.
We support this with scalable, white-labeled service operations and a dedicated client success team that continuously optimizes performance—so the program not only launches efficiently, but compounds value over time.”
How loyalty translates to revenue
Revenue streams and benefits to map out:
Interchange income from every daily transaction, independent of booking cycles
Increased direct bookings as card-linked incentives bypass OTAs (trading OTA commission margins for loyalty owned permanently)
Ancillary revenue from data-driven upsells like seat/room upgrades, travel insurance, car rental, and co-marketing partnerships with lifestyle brands
Higher customer lifetime value cardholders book more frequently, spend more per trip, and show greater resistance to competitive offers.
Roadmap to a co-brand debit program
Audit your loyalty program for the gaps. Where are customers disengaging between purchases or trips? Where does your brand lose visibility to OTAs or competitors?
Define your everyday spend thesis. Which spending categories do your customers transact in most frequently? Build your reward structure around those categories.
Decide: own, outsource, or hybrid? Evaluate your team's regulatory, operational, and technical bandwidth. Early-stage or non-financial brands typically benefit most from an outsourced or hybrid model that accelerates time-to-market.
Select a platform partner with the right criteria: API-first architecture, white-label flexibility, proven compliance infrastructure, speed-to-market track record, and processor ownership to avoid a multi-vendor chain.
Plan for data from day one. Identify how transaction data will feed into your personalization, upsell, and retention programs before you launch.
Set the right metrics. Track financial performance (interchange, CAC, program P&L), engagement (activation rates, monthly active users, transactions per card), and strategic outcomes (direct booking lift, LTV differential vs. non-cardholders).
Enable co-branded through program management
Program management is often the make-or-break layer in bringing co-branded debit to market, and the winning model is a full-stack execution.
Rather than forcing brands to stitch together issuing banks, processors, compliance workflows, and rewards infrastructure, platforms like SoFi Tech Solutions reframe program management as a unified service – owning everything from product design and regulatory compliance to risk, rewards, and core banking infrastructure.
What this looks like in practice:
Reduces operational lift, enabling loyalty and marketing teams to own and drive program strategy.
Simplifies economics with usage-based models (e.g., per point earned/redeemed), improving forecasting accuracy and P&L predictability.
Leverages API-first infrastructure to accelerate time to market, streamline CRM integration, and transform debit programs into scalable, adaptable loyalty engines.
The SoFi Tech Solutions Advantage
SoFi Tech Solutions is the financial technology provider connecting banks, fintechs and brands with innovative banking and processing capabilities to help people get their money right. This division of SoFi delivers modern digital solutions that are cloud-native, developer-friendly and regulation-ready powering exceptional, customer-centric financial experiences across North and Latin America.
Brands need a partner that can turn everyday spend into a scalable loyalty engine. SoFi Tech Solutions delivers a platform that removes the complexity of launching and managing co-branded debit, while enabling faster go-to-market, stronger data ownership, and continuous program optimization. SoFi Tech Solutions clients unlock:
- Faster launches with a unified, API-first platform
- Deeper engagement through owned data and direct deposit-driven usage
- Ongoing optimization to maximize activation, spend, and lifetime value
