Loyalty Register glossary
Revenue share
An agreement in which partners split the income from a shared activity, such as card spending or partner sales, by an agreed percentage or formula.
Revenue share (or revenue sharing) is an agreement in which two or more parties split the income from an activity they run together, by an agreed percentage or formula. An app store that keeps part of each sale, an affiliate paid a percentage of the sales it refers, and a brand that receives part of the income from its co-brand card are all revenue shares. In loyalty, it also appears in shopping portals, where the program shares retailer commission with members as points, and in partnerships where one side sells the other’s products to members.
Updated · By Loyalty Register Editorial TeamRelated reading
How is revenue share different from profit sharing?
Revenue share splits income before costs; profit sharing splits what is left after costs. A revenue share is easier to measure and verify, because each side only needs to see the sales, but it pays out even when the activity loses money. Profit sharing ties both sides to the result, but depends on how costs are counted, which gives more room for dispute.
How is a revenue share agreement structured?
The agreement defines the revenue base, the share, the payment terms and how the deal ends. The base might be card interchange, annual fees, net sales or commission received, and its definition matters as much as the percentage: 10% of gross sales and 10% of net sales after returns and discounts can be very different amounts. Shares can be flat or tiered, rising as volume grows, and may come with minimum guarantees or caps. Many deals also set a tail period, during which the share is still paid on customers acquired before the deal ended.
How is it different from selling points?
In a points sale, the partner pays a fixed price per point, whatever its own revenue does. In a revenue share, the payment moves with the partner’s income, so both sides share the upside and the downside. Many deals combine the two. According to the CFPB, a co-brand card issuer typically buys rewards in bulk from its merchant partner, which gives the merchant a steady revenue stream from its loyalty program. A deal can also add a share of card revenue on top of the points sale. Track the two lines separately, because they behave differently when spending rises or falls.
What should you check before you sign?
- The base. How returns, chargebacks and fees are treated, and what data you will receive to verify the calculation.
- Rights. Audit rights, clear payment dates and what happens if the partner changes its own pricing.
- Member value. If you pass part of the share to members, state their return per dollar spent. In a hypothetical case, a program that receives 5% commission on a $100 purchase and passes half to the member as points gives the member $2.50, or 2.5% of spend.
- Reporting. Report revenue share income separately from point sales, so the program’s economics stay easy to read.