Many French customers have become accustomed to using digital loyalty cards at checkout. In fact, loyalty cards are the most common item stored in digital wallets at 85%, ahead of payment cards at 48%. Digital loyalty cards—also called “virtual cards” or “electronic cards”—are used often in France. In 2024, 87% of French customers said they had at least one. With such extensive adoption, these cards have become an important marketing tool.

In this article, we explain digital loyalty cards, including how they work, what they offer businesses and customers, and how to create and market loyalty programs.

Key takeaways

• Customers store digital loyalty cards in digital wallets or dedicated apps. The card identifies customers at checkout, records their purchases, and gives them rewards based on the business’s rewards program.
  
• Using the card involves three steps. First, the business issues a custom card through a link or quick-response (QR) code. Next, the card identifies the customer at checkout. Finally, the platform automatically updates the customer’s balance and rewards.
  
• There are four main types of loyalty card programs: punch cards, points cards, status-based cards, and subscription cards that turn loyalty into recurring payments. Each program is suited to different kinds of businesses.
  
• Digital loyalty card programs offer businesses many tangible benefits, including reduced advertising expenses, proprietary databases, more frequent customer visits, larger average cart sizes, and fewer logistics compared to physical cards.
  
• To create a loyalty program, businesses follow several steps. First, they must decide on the program’s mechanics and financial equilibrium point and choose a specialized platform or develop software internally. Next, they can connect the software to checkout and customer relationship management (CRM) systems and ensure compliance with the General Data Protection Regulation (GDPR). Finally, they can conduct trial runs and monitor several indicators that measure program success.
  

What are digital loyalty cards?

Digital loyalty cards are loyalty cards that are stored electronically in customers’ digital wallets or in apps. The cards identify customers at checkout, record their purchases, and give them rewards based on the business’s loyalty program (e.g., points earned, number of visits, amount spent, referrals).

Digital loyalty cards serve the same purpose as physical ones, and they can be loaded onto digital wallets, such as Apple Wallet or Google Wallet. Each system uses different technology, but most digital loyalty cards are designed to identify customers, display balances and rewards, and update certain information remotely.

What are the differences among virtual, digital, and electronic loyalty cards?

There are no differences among virtual, digital, and electronic loyalty cards. However, where they are stored can vary. A loyalty card can be stored in a phone’s digital wallet, business’s app, or database.

How do digital loyalty cards work?

Digital loyalty cards typically follow a three-step process. First, the business issues the card. Next, the card identifies the customer at checkout. Finally, the platform updates the card balance remotely.

Businesses issue a unique card to each customer, who stores it in their digital wallet. The business scans the card at checkout, and the computer system recalculates the card’s balance and returns an updated amount.

Here is a closer look at how digital loyalty cards work.

Issue the digital loyalty card

The business issues the card using a simple method, such as a quick-response (QR) code displayed at checkout, link sent by text message or email, or website button. The link leads to an enrollment form. Once enrollment is approved, the platform generates a custom card signed using a certificate linked to the business’s developer account.

The signature authenticates the card and detects alterations. Digital wallets verify the signature during upload and reject cards that have been modified after issuance.

Identify the customer at checkout

At checkout, customers scan bar codes or QR codes on their phone screens to identify themselves. The business must have compatible checkout software or payment terminals. Some digital loyalty cards use telephone numbers as identifiers. This can be useful when lines are long or customers do not have their phones with them.

For online businesses, digital loyalty cards are connected to customers’ accounts. Customer accounts must be connected to the corresponding digital loyalty cards to ensure the same person cannot create multiple profiles.

Update the card’s balance remotely

Digital loyalty cards are updated automatically, without customer intervention. Once the customer completes the transaction, the platform recalculates the card balance and updates the card on the customer’s phone. Some platforms also send notifications.

The platform can also modify current offers, graphics, and program terms and conditions. Then, it applies them to all cardholders without reissuing cards.

What are the different types of digital loyalty cards?

There are four main types of digital loyalty cards: punch cards, points cards, status-based cards, and subscription cards. Which one a business chooses depends on purchase frequencies, average cart sizes, and margins available to pay for rewards.

Here are some details about each type of digital loyalty card.

Punch cards

Punch cards offer rewards after a certain number of purchases. Each visit or purchase earns one punch. Punch cards are best for businesses that customers visit often and businesses with small average cart sizes. These include bakeries, hair salons, and coffee shops.

Punch cards do not reward large purchases. For example, a €50 purchase earns the same number of punches as a €5 purchase.

Points cards

Points cards convert each euro spent into points that can be exchanged for rewards (e.g., gift cards, discounts, gifts) after reaching a certain threshold. This method works for all cart sizes and gives businesses stricter control over their finances. The conversion rate of the points directly determines how much the loyalty program costs as a percentage of revenue.

However, points cards require a calculation tool connected to the checkout process and a clear statement of point values. If the values are not clear, customers can accumulate balances they do not know how to use and can fail to claim their rewards.

Cashback is a popular variant of points cards. With this method, rewards are calculated as a percentage of the amount spent, instead of as points.

Status-based cards

Status-based cards assign tiers to customers based on the total amount spent. As they spend more, the tier gets higher, and the rewards increase. Rewards might include free shipping, priority access, dedicated services, or ongoing discounts.

Status-based cards are ideal for industries with strong status factors and long purchase cycles, such as fashion, beauty, hospitality, and sports. However, status-based cards reward top customers, so those who make occasional purchases might not benefit from rewards. If customers never reach the top tier, they can become disinterested.

Subscription cards

Subscription cards require fees to access loyalty programs. Customers pay a monthly or annual fee in exchange for ongoing benefits, such as discounts on all products, free services, or bonus content.

Subscription cards transform loyalty into recurring income and help high-value customers self-select. On the other hand, this model requires sufficient rewards to justify payment. This can limit it to businesses with extensive product lines or well-established businesses, such as major retailers and movie theater chains.

Why do businesses use digital loyalty cards?

Businesses use digital loyalty cards for cost reasons. Loyalty cards can reduce dependency on advertising, create proprietary databases, increase customer visits and average cart sizes, attribute revenue to identified customers, and eliminate the cost of physical cards.

Here are some details about why digital loyalty cards are important for businesses.

Reduced dependency on advertising

Businesses make advertising investments that often produce the same effects. On the other hand, databases of identified customers are reusable assets with marginal costs, once businesses establish their loyalty programs.

Proprietary databases

Browsers block cookies by default, and consent requirements have become more stringent. By contrast, data collected directly at checkout—with customer consent—is a reliable resource. Digital cards are a widely accepted data collection method because the rewards are clear and appealing.

Businesses can use databases to categorize customers and send targeted offers to specific segments, rather than sending the same message to all customers.

Increased visits and average cart sizes

The configuration of loyalty programs can influence two indicators: visit frequency and average cart size. Quick rewards incentivize frequent visits, while rewards thresholds that are set slightly above the average cart size encourage additional purchases.

Revenue attributed to identified customers

Without a way to identify customers at checkout, most in-store sales remain anonymous. Digital loyalty cards are an easy way for businesses to attribute transactions to customers and track their behavior. Data points include changes in spending habits, visit frequency, and early signs of disinterest.

Physical card costs

Printing, storing, shipping, and replacing physical loyalty cards is expensive and logistically complex. Digital cards eliminate these steps.

What are the benefits of digital cards over physical cards?

Digital loyalty cards offer many benefits: quick enrollment, no risk of forgotten or lost cards, and reliable purchasing data. Compared to physical cards, digital cards are easier to use and open up communication channels that the business controls.

Here are the primary benefits of digital cards.

Quick enrollment

The customer scans a code and confirms they want to add the card to the digital wallet preinstalled on their phone. They do not need to download a program, create a password, or free up storage space.

No risk of forgotten or lost cards

Cards live on customers’ phones, which they already use to pay for purchases. Cards can be reinstalled onto new phones using links. Servers record card balances, and customers no longer have to worry about forgetting their physical cards at home. They don’t lose their points, and businesses don’t lose identified transactions.

Reliable data and validation

The program automatically records every transaction on servers without scanning or entering a number at checkout. This creates a usable history without manual entry. This method also makes it easy to spot duplicates. On the other hand, a stamp can be counterfeited, or a physical card can be photocopied, which is outside of the business’s control.

High-visibility notification channels

Depending on which solution the business uses and which authorizations the customer provides, digital wallets can also become notification channels. Messages can be displayed on lock screens and can be triggered by a certain date, card balance, or proximity to a point of sale. The effects are measurable: 47% of French people say they have been influenced by digital wallet push notifications.

What businesses can offer digital loyalty cards?

Any business that relies on regular customers can benefit from offering digital loyalty cards. These include neighborhood businesses, chains with multiple points of sale, and subscription services. The main criterion is not the business’s size or industry, but the frequency of purchases.

Here are the industries that benefit the most from offering digital loyalty cards.

High-frequency neighborhood businesses

Bakeries, cafés, fast-food restaurants, produce markets, and hair salons are some of the businesses that benefit the most from digital cards. This is because their customers shop multiple times per month.

The benefits to businesses depend on visit frequency. A reward of a few cents per visit can be enough to keep customers coming back, which can create a noticeable effect within a few months.

Retailers and chains with multiple points of sale

Franchises—such as optical, perfume, and sporting goods stores—can benefit from unifying customer identification across the entire chain. This is because the same customer often visits different points of sale.

Digital loyalty cards can be used simultaneously across the entire franchise, which eliminates the need to store and distribute physical cards and standardizes data collection, regardless of which point-of-sale (POS) system each store uses.

Gyms, exercise studios, and recreation clubs

Subscription-based activities combine multimonth commitments with weekly visits, creating many opportunities for subscriber contact. Digital cards serve as an entrance pass and display current balances. They can also be used to encourage members with declining motivation, which can prevent them from canceling their memberships.

Online businesses

Online businesses can link loyalty programs to customer accounts to cross-reference online and in-store purchases. This is a reliable way to reconstruct omnichannel purchases without using external advertising.

How to create a digital loyalty card

There are multiple steps businesses need to follow to create digital loyalty cards. First, businesses must determine program mechanics and cost and choose technical solutions. Then, they can produce the brand assets and connect the program to checkout and customer relationship management (CRM) systems. Finally, they need to ensure compliance with General Data Protection Regulation (GDPR) and conduct trial runs of the programs before rollout.

Here’s how to create a digital card.

Determine the program mechanics and financial equilibrium

First, businesses must determine the program type and the pace and amount of rewards. Then, they can compare costs to margins. The cost—expressed as a percentage of revenue generated by cardholders—must be less than the expected increases in purchase frequency and average cart size.

Choose the technical solution

Businesses can choose between specialized platforms and internal development. Platforms require subscriptions, create loyalty cards, and handle notifications and dashboards. They are also quick to set up.

Internal development offers complete control and lower variable costs at high volumes. However, it also requires specialized skills. Businesses must also manage signature certificates and open issuer accounts with Apple and Google.

Produce brand assets and program rules

Digital loyalty cards require logos, background images, color palettes that are legible on screens, and brief labels. Businesses must also create the program rules. These include when points expire, how they are earned, how to cancel a card, and what happens to points in case of cancellation. The rules are binding, and the business must make them available to customers before they enroll.

Connect to checkout and CRM systems

To integrate the program successfully, businesses must verify that the checkout software’s optical scanners can read codes on screens. They must also verify that transactions are transmitted with cardholders’ identifiers and that their CRM systems synchronize data between online and physical stores, without creating duplicate entries.

Ensure compliance with GDPR

Enrollment requires an identified, legal database with clear information. Businesses must collect only the necessary data and store it for defined time periods. National Commission for Information Technology and Civil Liberties (CNIL) guidelines on managing commercial activities explicitly mention loyalty programs.

Hiring a contractor requires a subcontractor contract compliant with Article 28 of the GDPR and verification of data storage sites.

Conduct a trial run before rollout

The trial run can involve limited deployment to one or two points of sale for a few weeks. This can help identify difficulties (e.g., scanning codes, training employees, helping customers understand the program) and correct them before the full rollout.

How can businesses promote their digital loyalty cards?

The best place to promote digital loyalty cards is at checkout. This can be supplemented by promotion at all points of contact and rewards upon enrollment.

Here are the best ways to promote digital loyalty cards.

Train and involve sales associates

Most enrollments come from employees’ suggestions. Sales associates need to have defined opening lines and sales pitches. Businesses can set enrollment goals, track them by point of sale, and offer rewards to teams that meet the goals.

Make QR codes visible

QR codes need to appear anywhere customers look or wait in line, including cash registers, display cases, tables, receipts, product labels, and fitting rooms. Customers must be able to enroll during any downtime—such as standing in line or waiting for food at their tables—without help from employees.

Offer enrollment rewards

Businesses can overcome customer hesitation by offering tangible enrollment rewards, such as extra card punches, discounts on current purchases, and welcome gifts. Businesses need to budget for enrollment rewards as acquisition expenses and compare them to the cost of obtaining customers through advertising.

Activate existing customer bases

The fastest way to build an initial cardholder base is to send known customers emails or text messages with links for installation. However, such messages must comply with rules applicable to electronic prospecting and offer easy ways to unsubscribe.

Add programs to online order funnels

Businesses can offer their loyalty programs after purchases via unchecked boxes on confirmation pages or links in confirmation emails asking customers to subscribe. Customers must check the box themselves. Boxes that are checked by default are considered a dark pattern and do not constitute consent.

Maintain the program over time

Businesses must continue to maintain their loyalty programs or usage might decline over time. There are many strategies they can use, including double-point transactions, seasonal promotions, birthday rewards, and nudges of inactive cardholders.

How can businesses measure digital loyalty card effectiveness?

There are many ways to measure digital loyalty card effectiveness, including program adoption, engagement, and financial effect. Businesses can also use several indicators, including adoption rates, active cardholders, uninstallation rates, purchase frequencies, average cart sizes, and revenue increases.

Here are some indicators that help measure digital loyalty card effectiveness in both physical and online stores:

• Adoption rate
  The adoption rate refers to the number of cards installed compared to the number of transactions recorded over a given period. Tracked store by store, it immediately reveals which stores are not promoting cards effectively.
  
• Active cardholder rate
  The active cardholder rate measures the percentage of installed cards used at least once in a given period (e.g., the last 30, 60, or 90 days). A low usage rate suggests that rewards are out of reach to customers, or they do not understand the program.
  
• Uninstallation rate
  The uninstallation rate measures the percentage of cardholders who delete their cards. This often indicates excessive sales pressure. If the business sends a message and the number of uninstalls spikes, it might need to review the frequency of its communications or its target audience before sending the next one.
  
• Purchase frequency and average cart size
  Businesses can use both of these indicators to compare the same customer before and after enrollment and compare cardholders to noncardholders in a given period. These are the two factors that loyalty programs are designed to boost.
  
• Revenue increases
  Businesses can use revenue increases to compare changes in cardholder spending to a control group of customers not enrolled in the program. This indicator can help determine the program’s profitability.
  

How Stripe Issuing can help

Stripe Issuing allows you to easily create, distribute, and manage custom cards—generating new revenue streams and enhancing your customer experience.

Issuing can help you:

• Launch new card products: Quickly create physical, virtual, or tokenized cards customized to your specific business needs—whether that’s expense cards, rewards, or something else.

• Improve operational efficiency: Automate card issuance and management through Stripe’s APIs, reducing the complexity of working with multiple card issuers.

• Enhance customer experience: Offer your customers a branded card experience that integrates seamlessly with your existing products and services.

• Gain visibility and control: Access detailed transaction data and controls to monitor card usage, set spending limits, and suspend cards when needed.

• Expand revenue opportunities: Monetize your card programs by collecting shared interchange revenue or by offering value-added services.

• Access Stripe’s expertise: Benefit from robust infrastructure and compliance support, influenced by Stripe’s experience powering card programs for leading companies.

Learn more about how Stripe Issuing can help you drive growth with custom card programs, or get started today.

FAQs about digital loyalty cards in France