Guide 40 · Earn and redemption
Points plus cash: how to design it
Points plus cash lets members pay for a reward partly in points and partly in money. Offer it when many members hold balances too small for the rewards they want, and price the points portion at one fixed, published value per point. Set the cash portion so each redemption still covers its cost, decide whether the cash part earns points, and plan refunds and split payments before launch.
Points plus cash lets members pay for a reward partly in points and partly in money. It exists because many members hold points they cannot use: their balance is too small for the reward they want, so they wait, lose interest or let the points lapse. A points and cash option closes that gap. Designed well, it makes points useful sooner and reduces what the program owes. Designed badly, it becomes a discount that eats margin. This guide covers how to design it, with examples of how airline and hotel programs run their own Cash + Points options.
What it is
What is points plus cash?
Points plus cash is a redemption option in which a member combines points with a normal payment. Points cover part of the price at a set value per point, and the member pays the remainder by card or another payment method. It is sometimes called cash and points, and in payments terms it is a mixed payment: one purchase, two forms of tender.
It is different from a discount. A discount reduces the price for everyone who qualifies. Points plus cash reduces the price only by the value the member has already earned, so it rewards past behavior rather than giving away margin up front. That distinction holds only while the value per point stays fixed; once the points portion is priced case by case, members start to see it as one more promotion.
It can apply to catalog rewards, to normal purchases at the till or online, or to travel bookings. The design questions are the same: what a point is worth in the mix, how much of the price points can cover, and what happens when something is returned.
Travel examples
How do airline and hotel programs run points plus cash?
Travel programs are where most members meet the option, and their rules show the design choices in practice.
| Program | Minimum points | How the mix is set | Points on the cash portion | If the booking is cancelled |
|---|---|---|---|---|
| Southwest Rapid Rewards Cash + Points | 1,000 points, not on every flight | Options depend on the total fare | Yes, since January 1, 2025, including status credit | Remaining points return to the account |
| JetBlue TrueBlue Cash + Points | 500 points | Member uses a slider at payment | Not covered here | Not covered here |
| Marriott Bonvoy Cash + Points Awards | Set per hotel and night | Cash and points per night change continuously; standard rooms, at the hotel’s discretion | No | Not covered here |
Three lessons carry over to any program. A low starting point (500 or 1,000 points) is what makes the option useful to members with small balances. Letting the member choose the mix, as a slider does, works online but needs a clear rule for what each point is worth. And whether the cash portion earns points is a real decision: Southwest changed its rule so that the cash part earns points and status credit, while Marriott does not award points on the cash portion. Earning on cash makes the option feel fair; not earning keeps its cost down.
Why offer it
Why offer points plus cash?
It helps in three ways. Members with small balances can use them now instead of waiting, which keeps the program visible. Points leave the books sooner, so the points liability falls. And the program receives cash on redemptions that would otherwise have been paid entirely in points.
It also changes how members see their balance. Points become a way to pay rather than a savings goal that may never arrive. For programs with long gaps between rewards, that can be the difference between an active member and a dormant one.
What it costs
What does it cost?
The costs are real and mostly operational:
- Systems. Checkout, payments and refunds must split one transaction into two forms of payment and reverse it correctly later.
- Margin. If the cash portion is priced below the cost of the reward, each mixed redemption loses money.
- Cannibalization. Members may use the option on goods they would have bought anyway at full price, turning a paid sale into a part-discounted one.
- Trust. If the value of a point differs between offers, members stop believing any published value.
A hypothetical example shows the trade-off. A program carries 400 million points at 0.9 cents each, $3.6 million owed. Before points plus cash, members redeem 10% of the balance a year; after, 15%, an extra 20 million points used. The liability falls by $180,000 on those points, and members pay cash for the rest of each reward. Whether that is a gain depends on what the rewards cost to deliver, and on whether the extra redemptions replaced full-price sales.
Price the points
How should you price the points portion?
Use one value per point and publish it. The simplest rule is that a point is worth the same in a mixed payment as in a full redemption. Members can check the math, staff can explain it and finance can forecast it. Use how to set the value of a loyalty point to fix that value first.
Then choose the structure:
| Design choice | Options | What to consider |
|---|---|---|
| Value per point | Same as full redemption, or slightly lower | One value is clearest; a lower value protects full-points rewards but must be stated |
| How the mix is chosen | Slider, or two or three preset combinations | Sliders suit online; presets suit the till |
| Minimum points used | None, or a small floor | A floor avoids tiny point payments that cost more to process than they are worth |
| Maximum share in points | Up to 100%, or a cap such as most of the price | A cap keeps some cash on every mixed redemption |
| Where it applies | Catalog only, all purchases, selected categories | Excluding low-margin categories protects margin |
| Points on the cash portion | Earn as normal, or no earning | Earning feels fair to members; no earning lowers the cost of each mixed redemption |
Whatever you choose, make sure the cash portion of each redemption plus the value of the points covers the cost of the reward. If it cannot, the option is a discount, and stronger earning or better reward value may be a better lever.
Refunds
How do refunds and cancellations work?
Decide this before launch. The usual rule is that a refund returns points and cash in the same proportion they were paid. Partial returns, price adjustments and exchanges need their own rules, and points returned to an account need a clear expiry date. Write the rules into your terms, build them into every channel and train service staff, because a refund that returns points as cash, or cash as points, is the most common source of disputes.
When to build
When is it worth building?
Look at your own data first. Compare the typical active member’s balance with the price of your most popular reward, and look at the share of members who redeemed anything last year, your redemption participation. If balances are close to rewards but below them, and participation is low, points plus cash is likely to help. If balances are far below every reward, the problem is earning or reward pricing, and mixed payments will not fix it. If participation is already high, the build may not be worth the complexity.
Launch
How do you launch it?
- Fix and publish the value per point.
- Start with a limited scope, such as the catalog or one channel.
- Test split payments, refunds and partial returns end to end before members see the option.
- Report mixed redemptions separately, with points used, cash collected and the cost of rewards.
- After a few months, compare redemption participation, liability and full-price sales against the period before launch, then decide whether to widen it.
One more check before launch: security. Points that can pay for everyday purchases are more attractive to anyone who takes over a member’s account. Require the member to sign in or confirm the payment, alert members when points are spent, and watch for accounts that suddenly redeem large balances in small mixed payments. The loyalty fraud guide covers the main patterns.
More answers
Frequently asked questions
What is points plus cash?
A redemption option where members combine points with money to pay for a reward or purchase. Points cover part of the price at a set value per point, and the member pays the rest with a normal payment method.
Does points plus cash reduce the points liability?
It can, because members use balances they would otherwise hold. Each point redeemed leaves the liability. The effect depends on how many members actually use the option, so measure it rather than assume it.
Should a point be worth the same in points plus cash as in a full redemption?
Usually yes. A single published value per point is the clearest rule. Some programs give slightly less value in mixed payments to protect full-points rewards, but if the value changes between offers, members stop trusting what their points are worth.
How do refunds work on a points plus cash purchase?
Return points and cash in the same proportion they were paid, and decide in advance how partial returns and price adjustments are split. Write the rule into the terms and make sure the till, website and service team apply it the same way.
Can points plus cash cannibalize full-price sales?
Yes, if the cash portion is priced too low or the option is offered on goods members would have bought anyway at full price. Price the cash portion so each redemption still covers its cost, and watch whether cash sales of the same items fall.
Should members earn points on the cash portion?
It is a choice, and programs differ. Southwest's Cash + Points now earns points and status credit on the cash part, while Marriott Bonvoy does not award points on the cash portion of Cash + Points Awards. Earning makes the option feel fair; not earning keeps each mixed redemption cheaper. Whichever you choose, state it in the terms.
Is a slider or fixed combinations better?
A slider gives members full control and works well online. Fixed combinations, such as two or three preset mixes, are simpler at a till and easier to price. Many programs start with fixed combinations and add a slider later.