[SKIFT] A Look at the 2022 Travel and Lifestyle Credit Card Rewards Landscape

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iSeatz’s new “State of Loyalty: 2022 Credit Card Rewards Report” dives into the current options and trends around travel and lifestyle reward redemption programs to help industry leaders navigate evolving consumer spending patterns.

If we’ve learned anything over the past two years, it’s that it’s become impossible to predict the future, especially regarding consumer spending trends. Covid-19 caused a massive shift in credit card spending in 2020, moving dollars that might have been put toward travel and in-person experiences to grocery delivery, takeout, gas, and streaming services. However, the tide changed in 2021 as the pent-up demand for travel and the softening of lockdown restrictions caused travel spending to soar across all categories, including flights, hotels, and car rentals.

The shift in spending patterns fueled many credit card issuers to change and expand the ways customers earn points and rewards, especially for lifestyle products. However, there’s room for improvement — and opportunity — when it comes to how consumers can redeem points for the same products.

“We’re seeing bookings well above 2019 levels in all the major travel categories. Travel rewards are and will continue to be in demand, but there are shifts in customer behavior that shouldn’t go unaddressed,” said iSeatz founder and CEO Kenneth Purcell.

How can reward programs meet these changing needs? Purcell explained that “Leisure travelers have been in the majority for the past two years. So while a business traveler may have used points on upgrades and lounge access in the past, a vacation rental and food or grocery delivery are what travelers are looking for now.” Lifestyle products are a great supplement to a travel reward portfolio to enable brands to expand their customer base and provide more personalized offers.

To help business leaders develop an effective redemption strategy for travel and lifestyle rewards in this new consumer landscape, iSeatz has launched its new “State of Loyalty: 2022 Credit Card Rewards Report.”

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iSeatz’s benchmark report provides an overview of the reward redemption opportunities on the market, outlines engagement strategies of the major players in the travel and lifestyle space, and explores the most promising trends. Here, SkiftX presents the report’s key themes and findings.

A Comparison of Reward Redemption Offerings

Financial institutions in the U.S. have increasingly moved toward a diversified rewards portfolio that includes both travel and lifestyle options.

The report explains the different elements of credit card programs, such as offers, benefits, and cash back, and compares the financial benefits, redemption opportunities, and point-integrated products of 27 issuers. The analysis shows that lifestyle reward redemption choices remain somewhat limited, despite the growing range of point-earn opportunities.

Buy Now Pay Later

The ability to pay for goods, services, and experiences in installments received a digital upgrade over the past few years, thanks to new Buy Now Pay Later options that give access to monthly, semi-monthly, or weekly payments directly at check out, often without interest.

The report provides an overview of the state of the Buy Now Pay Later market, including expected growth, major players, consumer groups and companies driving the trend, and the strategies of leading credit card issuers. It also highlights the contrast between the growing interest in Buy Now Pay Later and the increased importance of financial savings.

Pay With Points

At the end of 2019, financial institutions started to partner with retailers such as Amazon, Apple, and Best Buy to allow shoppers to redeem credit card points at check-out.

The report highlights three reasons why this trend continues to grow and why it’s a win-win for both issuers and consumers.

Digital Wallets 2.0

Once a way to pay more quickly and conveniently using a smartphone, digital wallets are now transforming into aggregators of various digital assets, including loyalty program reward points, gift cards, and cryptocurrency.

The report outlines the evolution of digital wallets, from the first mover Points.com to the two current major players, PayPal and Bakkt, and outlines the pros and potential pitfalls of integrating loyalty programs with these aggregators.

Cryptocurrency Rewards

The global value of the cryptocurrency market is nearing $3 trillion. As of last year, more than 40 percent of deposits came from first-time investors who might not have a high level of knowledge of cryptocurrencies, but are attracted by the potential for short-term gains. Credit card issuers have an opportunity to enter the space by offering cryptocurrency rewards.

The report describes the first strategic partnerships struck by Visa and Mastercard, with crypto platforms Coinbase and Bakkt, respectively, and explains the continuous growth of the global cryptocurrency market: Several countries have either announced or are currently developing central bank digital currencies, and according to Independent Community Bankers of America (ICBA), “Forty percent of Americans who have heard of cryptocurrency believe it will be widely accepted as a payment type in the next 10 years.”

Future-Proofing Reward Strategies

The world today is much more unpredictable than it was two years ago. In such a fluctuating environment, the best approach is the most flexible one. The same lesson applies to credit card issuers and the companies that partner with them. Using a flexible and diversified engagement strategy to stay relevant and meet the shifting needs of consumers is what will deliver value now and into the future.

As Purcell explained, “Point-earn opportunities for meal delivery, media streaming, and grocery shopping will continue to be relevant to consumers beyond the pandemic, but as we saw last spring and summer, demand for reward travel remains strong. Incorporating redemption for trending travel products like live events, wellness, and vacation rentals will provide compelling touchpoints for cardholders to plan their dream vacations, while solutions like Buy Now, Pay Later, will help make those trips more attainable.”

Download the report to learn more.


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