The Death of Traditional Co-Branding: Why Reward Cards Are Losing Their Edge

For decades, the co-branded credit card was the undisputed king of the wallet. Whether it was the shiny Qantas Frequent Flyer plastic, a Marriott Bonvoy card for the jet-setters, or the classic fuel card that saved you 4 cents a litre at the pump, these partnerships were the ultimate "win-win." Banks got loyal spenders, brands got data and customer "stickiness," and consumers got a free flight to Bali every few years.

But fast forward to 2026, and the landscape looks fundamentally different. The "glory days" of co-branding aren't just fading; they’re hitting a brick wall.

Inspired by the recent insights from payments expert Dwayne Gefferie, we’re diving into why the traditional co-branding model is losing its edge. Between the rapid adoption of Electric Vehicles (EVs), the dominance of e-commerce, and a massive shift in how regulators view interchange fees, the old playbook is officially obsolete.

If you’re a fintech founder or a marketing lead at a legacy bank, it’s time to pay attention. The juice simply isn't worth the squeeze anymore: at least not in the way it used to be.

The EV Revolution: Killing the Fuel Card

Let’s start with one of the biggest staples of the co-branding world: the fuel card. For fifty years, the "petrol card" was the bread and butter of retail loyalty. You drive, you fill up, you tap your co-branded card, and you get points or a discount.

However, as EV adoption reaches a tipping point in 2026, this entire ecosystem is evaporating. When you charge your car in your garage overnight, you aren't visiting a Shell or a BP. You aren't walking into the convenience store to buy a mediocre meat pie and a Gatorade. The "hook" that made fuel co-branding valuable: consistent foot traffic and high-frequency spend: is disappearing.

Dwayne Gefferie has been vocal about this: as the physical act of "refuelling" moves from the roadside to the home, the loyalty loop is broken. Traditional fuel brands are scrambling to figure out how to remain relevant in a world where their primary product is no longer a destination. For fintechs, this means the vending and automated retail sectors are seeing more innovation than the traditional fuel pump.

E-Commerce and the Erosion of Brand Loyalty

It’s not just the car industry causing headaches. The way we shop has fundamentally shifted. In the past, a co-branded department store card made sense because that store was your primary shopping destination.

Today, the "everything store" (Amazon) and the rise of social commerce (TikTok Shop, Instagram) have fragmented our spending. Why would a Gen Z or Millennial consumer carry a card that only gives them 3x points at a specific retailer when they can use a general-purpose card that gives them rewards across every digital platform?

The "frictionless" nature of e-commerce also means that checkout speed is more important than loyalty points. If a co-branded card doesn't play nice with a digital wallet or offer a seamless payment gateway experience, it stays in the drawer. Consumers are choosing convenience over coupons every single time.

The Regulatory Divide: Europe vs. The US

One of the most critical factors in the death of co-branding is something most consumers never see: interchange fees. This is where the US and Europe are heading in completely different directions.

In Europe, regulatory caps on interchange fees (the Multilateral Interchange Fee or MIF) have been a death knell for high-reward co-branded cards. When banks are only earning 0.2% on debit and 0.3% on credit transactions, there simply isn't enough margin to fund those "free" business class flights. This is why we’ve seen European co-branding become a shadow of its former self.

In the US, the story has been different: for now. High interchange rates have allowed American Express, Chase, and Citi to keep the reward party going. However, even in the "Land of the Free," the value proposition is weakening.

This brings us to the current economic climate and the "Big Beautiful Bill" (the latest sweeping economic reform package coming out of the US). While there is a push for deregulation in some areas of fintech, the sheer cost of maintaining these reward programmes is becoming unsustainable even for the big players. The "Big Beautiful Bill" may provide some corporate tax relief, but it doesn't change the fact that merchants are fighting harder than ever against high swipe fees. If the US moves toward a more European-style cap: or if Open Banking continues to gain steam: the funding source for these rewards will dry up overnight.

General-Purpose Cards: The New Kings of the Wallet

While co-branded cards are struggling, general-purpose "lifestyle" cards are winning. Why? Because they offer flexibility.

In a post-COVID world, consumer habits are less predictable. We might travel a lot one year and spend it all on home renovations the next. A card that gives you "points" that can be converted into any airline, used for statement credits, or even swapped for crypto is infinitely more valuable than a card locked into a single hotel chain.

We are seeing a massive shift toward payment orchestration where the backend handles the complexity, and the consumer just gets the best deal regardless of where they shop. The modern consumer is savvy; they realise that being "locked in" to one brand is a losing game.

The Need for Innovation: Moving Beyond the Plastic

So, is co-branding dead? Not entirely, but it needs a radical reboot. The future isn't in a plastic card with a logo on it; it’s in integrated, data-driven experiences.

Here is where fintech startups can actually win:

1. Embedded Finance: Instead of a card, embed the financing and loyalty directly into the app experience.

2. Stablecoin Rewards: With the rise of the stablecoin category, we’re seeing brands experiment with instant, programmable rewards that have real-world value outside of a specific loyalty portal.

3. Hyper-Personalisation: Using AI in fintech to offer rewards based on real-time spending patterns, rather than a generic "one size fits all" points system.

4. Tokenisation: Leveraging tokenisation for security and to create seamless "one-click" loyalty redemption at the point of sale.

The brands that will survive are those that stop thinking about "cards" and start thinking about "utility." If your reward programme requires a customer to jump through five hoops to redeem a $20 voucher, you’ve already lost.

The Australian Context: A Middle Ground?

In Australia, we sit somewhere between the high-margin US market and the hyper-regulated European market. Our card payment ecosystem is efficient, but the pressure on interchange is real. Australian consumers are also some of the fastest adopters of new tech, from mobile wallets to Open Data initiatives.

For Australian fintechs, the opportunity lies in bridging the gap between traditional loyalty and the new digital reality. We need to move away from the "points for spend" model and toward a "value for engagement" model.

Final Thoughts: Adapt or Disappear

The death of traditional co-branding is a classic case of market evolution. The world moved on, but many loyalty programmes stayed stuck in 2010. The rise of EVs, the dominance of e-commerce, and the tightening of global regulations mean that the "old way" of doing things is no longer profitable or attractive to the end user.

At Kian Jackson, we specialise in navigating these complex shifts in the fintech landscape. Whether you’re looking to overhaul your payments strategy or understand how leadership in fintech needs to evolve in a post-co-branding world, we’re here to help.

Ready to future-proof your fintech strategy?

The landscape is changing fast: don't get left behind with a 20th-century loyalty model. Reach out to the experts at Rivatech Consulting to discuss how you can innovate in the modern payments era.

Connect with us directly: Contact Kian Jackson

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