Introduction
This is Part 3 of a 4-part series on the evolution of in-store loyalty.
In the previous article, we explored how Card-Linked Offers address friction but introduce challenges around attribution, control, and reliability.
To fully understand these trade-offs, it’s important to recognise that not all CLOs are built the same.
In reality, they exist in multiple distinct forms — each built on a different data source, operating model, and set of trade-offs.
While they all aim to deliver rewards based on payment behaviour, the way transactions are detected — and what that enables — varies significantly.
Understanding these differences is critical for:
- merchants evaluating partnerships
- and loyalty programs designing propositions
Each model solves a different part of the problem — but none resolve it entirely. This is why Card-Linked Offers often appear effective in isolation — but reveal structural gaps at scale.
The Three Models of Card-Linked Offers
1. Issuer-Led CLOs
In this model, CLOs are operated directly by the card issuer as part of its loyalty or cashback programme.
Because the issuer sits at the source of the transaction:
- 100% visibility across all card spend
- High data reliability and accuracy
- Ability to build rich, longitudinal spend insights per cardholder
- Strong foundation for personalised offer curation
This makes issuer-led CLOs the most data-complete and reliable model.
However, they are naturally limited to:
- the issuer’s own card base
- and require deep issuer integration to scale
2. Merchant-Led CLOs
Here, CLOs are operated by a merchant, typically in partnership with their payment acquiring partner.
Because the acquirer processes all transactions at the merchant’s PoS:
- Full visibility of all transactions at that merchant
- Coverage across all payment methods (cards, wallets, etc.)
- High data reliability within the merchant ecosystem
This enables:
- strong in-ecosystem personalisation
- control over customer engagement within owned channels
However:
- visibility is limited to that merchant
- there is no insight into customer behaviour outside that ecosystem
- dependency on a specific acquirer can introduce long-term switching constraints
3. Coalition-Led CLOs
This is the most widely distributed model, typically operated by coalition loyalty programmes and cashback platforms, in partnership with card networks or third-party aggregators.
Here, transactions are identified through “transaction spotting” between:
- enrolled cards
- and participating merchants
This model enables:
- broad cross-merchant reach
- easier onboarding across merchants and markets
But comes with structural limitations:
- Incomplete and inconsistent transaction detection
- Coverage limited to participating networks and enrolled cards
- Lack of deterministic visibility of qualifying transactions
- Dependence on external systems for transaction identification
Among the three, this is the most scalable in distribution — but the least deterministic in data and flexible in payment coverage.
The key differences across the three models become clearer when viewed side by side.
A Common Constraint Across All Models
Despite their differences, all three models share two fundamental challenges:
1. Causality remains unresolved
Because rewards are triggered passively, it’s difficult to determine whether a transaction was:
- influenced by the programme
- or would have occurred anyway
This creates:
- ambiguity in measuring incrementality
- pressure on merchant ROI
2. No deduplication across programmes
A single transaction can:
- involve a card enrolled in multiple programmes
- occur at a merchant participating in multiple ecosystems
This raises a key question:
Who should be credited for the transaction?
Without clear resolution:
- multiple programmes may claim the same spend
- or merchants risk over-rewarding
What This Means Strategically
Each CLO model optimises for a different dimension:
- Issuer-led → depth of data and transaction reliability
- Merchant-led → control within ecosystem (with acquirer dependency)
- Coalition-led → breadth of distribution (with trade-offs in reliability and coverage)
But none fully resolve the combined need for:
- deterministic transaction visibility
- complete and reliable capture of qualifying transactions
- seamless, real-time customer engagement
- scalable distribution across ecosystems
Bridging the Gap: From Dependency to Direct Control
While issuer-led models offer the highest level of data reliability and transaction visibility, they are inherently limited to the issuer’s own card base.
In contrast, merchant- and coalition-led models enable broader reach — but rely on external systems such as acquirers and card networks to detect and report transactions, introducing dependency and loss of control over transaction capture.
This creates a structural divide:
- some players operate with direct transaction control, but limited reach
- others offer scale, but rely on external systems for transaction detection
This structural divide points toward a fundamentally different approach — one where transaction capture, customer identification, and reward logic are no longer dependent on external systems, but integrated directly into the payment itself.
By enabling merchants and coalition programmes to issue purpose-built payment credentials to their own audiences, it becomes possible to:
- establish deterministic customer identification at checkout
- ensure complete and reliable capture of qualifying transactions
- enable seamless earning and redemption within the payment experience
- maintain control over customer engagement at scale
In effect, this allows non-issuers to achieve issuer-like transaction visibility and reliability, without being issuers themselves.
Conclusion
Card-Linked Offers are often positioned as a unified category — but in practice, they represent three structurally different approaches to linking rewards with payments.
Understanding these distinctions is key to evaluating:
- scalability
- data reliability
- and commercial viability
Each model optimises for a different dimension — but they diverge fundamentally in how transactions are captured and controlled.
- Issuer-led models offer direct visibility, but are limited in reach
- Merchant- and coalition-led models offer scale, but depend on external systems for transaction detection
Ultimately, the effectiveness of any loyalty model depends not just on reach — but on how directly it participates in the transaction it seeks to influence.
As retailers look to combine seamless customer journeys with accurate attribution and real-time engagement, a more integrated approach becomes necessary — one where loyalty is not layered onto payments, but embedded within them.
