The Tipping Point: How Fintech is Reshaping Travel Rewards and Consumer Spending

The travel rewards landscape is at a crossroads. While 55% of U.S. consumers now belong to loyalty programs with travel booking capabilities—a 22% surge since 2023—these programs are increasingly criticized for poor user experiences, opaque redemption rules, and a lack of flexibility. Meanwhile, fintech companies are seizing the opportunity to redefine loyalty and cashback ecosystems, leveraging embedded finance, AI-driven personalization, and seamless integration to outpace traditional travel brands. For investors, this shift represents a critical inflection point: the decline of legacy travel rewards is not a collapse but a transformation, with fintechs poised to dominate the next era of consumer spending.

The Fracturing of Traditional Travel Loyalty

The iSeatz "Tipping Point" study reveals a stark disconnect between consumer expectations and brand execution. While 62% of travelers cite poor user experience as a barrier to using loyalty programs, only 6% of brands acknowledge this as a problem. This misalignment has eroded trust: McKinsey reports a "steep decline" in the likelihood of customers recommending airline, hotel, or cruise line loyalty programs. Compounding this, post-pandemic point devaluation and inflation have made cost-conscious travelers prioritize tangible value over brand allegiance.

Traditional travel companies are struggling to adapt. For example, Delta's partnerships with Starbucks and Uber—designed to attract younger, flexible consumers—highlight the need for diversification, but these efforts remain siloed. Meanwhile, 30% of travelers still book directly with travel companies or OTAs, while only 16% use loyalty programs. This fragmentation signals a loss of relevance for legacy systems that fail to address modern consumer pain points.

Fintech's Rise: Embedded Finance and AI-Driven Personalization

Fintechs are filling the void by embedding loyalty and cashback features into everyday financial tools. Revolut's RevPoints program, for instance, rewards users for spending, transaction rounding, and in-app challenges, with points redeemable for airline miles or travel discounts. Within a year, users earned over a billion points, demonstrating the power of gamification and real-time rewards. Similarly, SoFi's Member Rewards program incentivizes financial activity—like setting up direct deposit or refinancing loans—with points redeemable for travel, savings, or investments.

The key to fintech's success lies in personalization. AI and machine learning enable hyper-targeted rewards based on spending habits and preferences. For example, NerdWallet's AI-powered cashback program rewards users for “smart financial decisions,” aligning loyalty with financial empowerment. This data-driven approach not only enhances engagement but also fosters long-term customer relationships, a critical metric for brands now prioritizing Customer Lifetime Value (CLV) over short-term gains.

Marqeta, a fintech platform enabling card programs, exemplifies this trend. In Q2 2025, its Total Processing Volume (TPV) surged 29% year-over-year to $91 billion, driven by expanded program management capabilities and strategic acquisitions like TransactPay. Its Adjusted EBITDA margin hit 19%, up from 1% in 2024, reflecting operational efficiency gains. For investors, Marqeta's growth underscores the scalability of fintech-driven loyalty ecosystems.

The Future of Loyalty: Flexibility and Experiential Rewards

Flexibility is another fintech advantage. Hopper’s B2B division, HTS, offers airline partners a full suite of data-driven travel fintech ancillaries that offer consumer flexibility and confidence when booking.

HTS’ Disruption Assistance offers customers real-time solutions when travel disruptions occur. HTS actively monitors flights for disruptions – if a traveler’s flight experiences a qualifying disruption (typically a delay of 2+ hours or cancellation on the day of travel), the passenger is immediately notified. Travelers choose between selecting a new flight to their destination on any airline that is paid for by HTS up to the allowable amount, or keeping their delayed flight and having HTS refund their original flight cost. This product provides tangible benefits to travelers who are disrupted.

Fintechs are also addressing the “points liability” challenge—unredeemed points that burden brands—by offering emotionally resonant rewards. For example, Revolut's partnerships with brands like Spotify and Amazon allow users to redeem points for streaming subscriptions or exclusive purchases, driving redemption rates and reducing liability.

Investment Implications: Where to Allocate Capital

For investors, the shift in loyalty ecosystems presents two clear opportunities: 1. Fintechs with Embedded Loyalty Platforms: Companies like Revolut, SoFi, and Marqeta are integrating loyalty features into core financial services, creating sticky ecosystems. Marqeta's 17–18% net revenue growth guidance for 2025 suggests strong momentum. 2. AI-Driven Personalization Firms: NerdWallet and similar platforms are leveraging data analytics to tailor rewards, a trend expected to grow as open banking APIs expand interoperability.

Conversely, traditional travel brands face headwinds unless they adopt fintech-like agility. Delta's recent partnerships are a step forward, but without addressing UX and flexibility, they risk falling behind.

Conclusion: The New Loyalty Paradigm

The decline of traditional travel rewards is not a failure but a redefinition. Fintechs are reimagining loyalty as a seamless, personalized, and experiential experience, aligning with modern consumer demands. For investors, the lesson is clear: the future belongs to platforms that integrate loyalty into everyday financial tools, leverage AI for hyper-personalization, and prioritize flexibility over rigid point systems. As the loyalty and cashback fintech market is projected to grow from $9.1 billion in 2023 to $30.7 billion by 2025, now is the time to position capital in innovators rewriting the rules of consumer engagement.

The tipping point has arrived—and fintech is the new gold standard.