Paid loyalty is eating free loyalty

The argument

Loyalty Register's own profile counts expose the direction of travel. Of the 214 programmes with known status, 112 run tier schemes. That is a narrow majority in the overall market, but the sector splits reveal where paid loyalty is consolidating. In airlines, 61 of 61 programmes with known status run tiers. In hotels, 18 of 18 run tiers. These are the industries where paid fares and room rates already gate every interaction, and the loyalty programme has followed that logic: status and benefits now attach to money spent, not to mere membership.

Retail shows the same mechanism at work. Of 46 retail programmes with known status, 25 run tiers. That is more than half, and it is a sector where free points cards were once the default. The shift is not universal, but it is directional. Restaurants, with 2 of 22 known-status programmes running tiers, and banking, with 1 of 14, still lean free. Yet the largest consumer-facing categories beyond travel are adopting tiered, spend-based structures.

Grocery and fuel hold the free model in place, but their absence of tiers is not evidence that free loyalty is healthy. It is evidence that those sectors have not yet found a paid mechanism that fits frequent, low-margin purchases. Loyalty Register counts 0 of 18 grocery programmes and 0 of 12 fuel programmes running tiers. The free points schemes in those sectors are not winning; they are waiting. The economics of the vendors serving loyalty programmes reinforce this. Among the 87 vendors profiled, 48 publish pricing, which means the market for loyalty technology is itself commercial and paid-first. The infrastructure to run paid tiers is being sold, while free programmes remain stuck on older, low-cost models.

The strongest counter-argument

Tier presence is not the same as paid loyalty. Many tiered programmes are free to join and reward customers based on spend without charging a subscription or a fee. The counts from Loyalty Register do not record whether a tier scheme is paid to enter or merely spend-gated. Grocery and fuel may resist tiers because their baskets are too small and their margins too thin for tier economics, not because paid loyalty is eating them. In that view, airlines and hotels run tiers because their fares and room rates are high enough to make status valuable, while free loyalty remains rational in grocery and fuel. The data show a sectoral difference, not a secular replacement.

What would change our mind

If Loyalty Register's next update finds fewer than 112 of the 214 programmes with known status running tiers, or finds grocery and fuel programmes running tiers at the same rate as airlines and hotels, the claim is wrong. More specifically, if the next count shows 18 of 18 grocery programmes or 12 of 12 fuel programmes running tiers without any paid subscription or spend-based threshold attached, then free loyalty is not being eaten; it is being copied by paid mechanics without displacement.

What follows if we are right

A programme operator should stop treating free points as the default. Build a paid or spend-gated tier, charge a subscription or set a revenue threshold, and allocate budget to tier benefits rather than broad free earning. In grocery and fuel, the current absence of tiers is an opportunity to launch a paid club before competitors do, because the firms that move first will define the paid mechanics for those sectors.