Swipe (or nowadays, tap) your credit card, and earn points. A process that’s now commonplace has a lengthy history that can teach us more than a few things about customer loyalty — and its journey through technology. Let’s start at the beginning. 
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From paper to plastic 💳
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While the history of credit cards dates back thousands of years, things turned from stone to metal — and later paper and plastic — about halfway through the 20th century with the arrival of the modern credit card in 1950. Reportedly invented following a case of a forgotten wallet, The Diner’s Club Card (initially owned by Discover Financial Services before its acquisition by BMO in 2009) was the first multipurpose charge card credit card intended primarily for dining and travel expenses. 
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The Diner’s Club was also the first to pair the concept of charging credit with fueling consumer loyalty through the inception of points. Through partnering with dining, entertainment, and later, travel entities (i.e., airlines, rental cars, and hotels), Diners Club cardholders paid a tiered annual fee to gain special perks based on how much money they spent. The greater the yearly fee, the greater the perks. 
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About eight years following Diner’s Club in 1958, American Express entered the credit card industry with the world’s first international charge card, which initially had an annual fee of $6 (one dollar more than Diner’s Club). Shortly after, Bank of America and Mastercard followed suit. During this initial period, most credit cards focused on offering customers just that — credit — with loyalty and reward yet to take off. 

Welcome, rewards 👋

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As competition grew amongst credit card providers, companies began to up the ante on what they could offer their customers for swiping that sweet, sweet plastic. Welcome to the Age of Rewards. American Airlines was the first to launch a major loyalty program in 1981 with the introduction of the frequency flier program, one of the most direct consumer-focused loyalty programs of its time. The idea was simple: spend money on an eligible airline-linked credit card and get rewarded with points you could redeem for flights (miles are typically worth between $0.014 to two cents spent). 


Diversification of loyalty 📈


Over time, this offering expanded to more diverse and often tiered rewards for spenders via strategic brand partnerships: hotel stays, rental cars, dining perks, and even cash back and free redeemable products. More and more credit card companies quickly adopted the loyalty-focused practice, and later, countless consumer brands followed the early path of credit card companies by starting to incentivize their customers with rewards and exclusive experiences for spending money on their products.  
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The turn of the millennium saw a technological shift in credit card loyalty programs via the migration to digital platforms and a growing focus on personalization and analytics based on spending patterns and product preferences. These early innovations made it easier for customers to track and redeem rewards — though, as is often the case with once-revolutionary technology, credit card loyalty programs became increasingly clunky and limited over time (more on that below).


The web3-ification of credit card loyalty ⛓️


‍With new ways to connect consumers to products and brands — including the rise of web3 and cryptocurrency — came a reimagined take on credit card loyalty programs via blockchain technology. While credit card companies like American Express have experimented with NFTs to boost consumer engagement, others like VISA are piloting programs to breathe new life into credit card points and loyalty programs.

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Following multiple forays in web3, ranging from a crypto advisory brand to the adoption of stablecoins like USDC (and even the purchase of a CryptoPunk NFT), VISA’s new customer loyalty platform is focused on two tracts: web3 wallets and digital collectible-powered loyalty. Through the adoption of wallets, the financial services giant is offering consumers new ways to store reward points and linked digital collectibles (i.e., NFTs) and gain secure and direct access to experiences and perks — which they appear to be targeting brands to offer their customers via adopting their technology. 

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VISA also notes its plan to support more loyalty initiatives powered directly by digital collectibles, a move which likely is intended to fuel consumer engagement (cue: spending) and deliver value back to customers beyond just points and mileage — which, if you look at the dollars-to-points breakdown shared above doesn’t give you much travel for your buck. Finally, anyone who has ever earned miles on an airline knows how hard (or impossible) they are to transfer from one account to the next, which is why web3-enabled loyalty programs are a perfect use case for flexing the interoperable capabilities of blockchain to seamlessly transfer points across platforms and wallets (something VISA notes as an added feature on their website).

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As many of the traditional loyalty programs have waned in innovation, rewards, and retention — and can even be responsible for inflating fees for certain demographics — VISA’s new loyalty play hopes to empower brands to safely and securely reward customers not only through transactions but dynamic engagement online and IRL. For their current customers and prospective brand partners (and their consumers) who are looking to earn more when they spend, it’s a hopeful new spin on an age-old industry.


Are you a brand or credit card provider looking to use web3 to boost customer engagement? Drop us a line and we’ll get you started.