Loyalty Is a Currency

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Your loyalty points are money. They have a price (about a cent each), they buy things, and they hold value until the issuer decides they don't. That makes them a currency. Just a private one.

The problem is they can't move. Qantas Points live in Qantas. Everyday Rewards live at Woolworths. Your bank's points live in a portal you open once a year. Australians belong to about ten programs each and actively use half of them. The wallets don't talk to each other.

So the money sits. Programs report redeeming fewer than half of the points they issue. Qantas members earned 242 billion points in FY26 and redeemed 202 billion, and the unredeemed balance on Qantas's books now stands at A$3.6 billion. The three biggest US airlines carry about US$27.6 billion of the same thing. The industry's word for the value people forget is breakage.

Every other store of value eventually got rails. Bank money got SWIFT, then card networks, then real-time payments. Data got open banking. Dollars got stablecoins. Each time the rails arrived, dormant value started moving and the market got bigger, not smaller.

Loyalty is the last big pool of value without rails. The first practical rail is the digital gift card: regulated in Australia with a three-year minimum life, instant, and spendable at the shops people already use. Points in, gift cards out.

That is what we have built at Mavitra, to work with programs, not around them: programs win and keep customers, retailers gain new ones, members get real value. The platform is built, early access is open, the gift card catalogue is being connected, and conversations with the first programs have started. The rest of this article is the argument. If you've got fourteen minutes, keep going.

I run a company that turns loyalty points into gift cards. Before that I spent close to thirty years, from 1997, building systems for banks, telcos and government. The two careers meet at one observation: the loyalty industry runs a currency and mostly doesn't call it one.

The industry is starting to use the word. The founder of the biggest gift card distribution platform said this year that gift cards "are no longer a niche perk – they are digital currency" and that "what's missing is connective infrastructure." The CEO of IAG Loyalty talks about "a strong currency like Avios." A 2025 book from the firm that values airline programs estimates that loyalty currencies, counted together, would be the world's third-largest reserve after the US dollar and the euro. Even the UN's statisticians recommended in 2024 that points and gift cards be counted as financial assets.

Naming a thing correctly tells you which tools to use on it. If points are marketing, you optimise for engagement and accept that a lot of them expire. If points are money, you ask the questions economists ask of money: who issues it, what backs it, what's the inflation rate, how liquid is it, and where are the rails. This article asks those questions of the Australian loyalty system. A longer, fully referenced version in thesis format is linked at the end.

1. The money test

Economists have used the same three tests of money since the 1870s: a unit of account, a medium of exchange, a store of value. Modern payments add a fourth the textbooks took for granted: portability. Cash passes all four. So does bank money, once you count the rails that move it. Here's how points score.

Unit of account. Points have a price. Every program sets a rate into goods, and every points enthusiast knows their cents-per-point to a decimal. Anything priced, quoted and compared like that is working as a unit of account.

Medium of exchange. Points buy things: flights, groceries, fuel, gift cards. The exchange is real but it happens inside a closed loop. This is a currency with a border around it.

Store of value. Points hold value across time, which is the whole premise of saving for a flight. But they hold it badly. Qantas Points expire after 18 months without activity, Velocity after 24, Everyday Rewards after 18, Flybuys after 12, and the issuer can change the price at its discretion. A savings account with a negative interest rate and a closing date.

Portability. Here the test fails outright. There is no sanctioned way to move Qantas Points to a non-Qantas use, Flybuys to a non-Coles use, or bank points anywhere except the bank's catalogue and a short list of airline transfers. The terms prohibit sale and most transfers, for sound reasons: fraud, fairness and the integrity of the currency.

Three passes and a fail. Nobody designed the fail on purpose. Each program was built to reward its own customers, which is exactly its job; portability was never in the brief. But a currency that can't leave its loop is hard to spend, and a currency that's hard to spend sits. That's a problem for programs as much as for members.

2. The money supply, and the pool that never moves

If points are money, the first thing to measure is the money supply: how much is issued, how much comes back, and what happens to the difference.

Qantas gives the clearest Australian picture because it reports all three. In the year to June 2026 members earned 242 billion points and redeemed 202 billion. The 40 billion gap isn't all breakage; much of it is people saving towards a flight. But it's value that didn't move, and it joins a balance of unredeemed frequent flyer revenue that has risen at every half-year result since December 2023, from A$3.1 billion in December 2023 to A$3.6 billion in June 2026. When United pledged MileagePlus as loan collateral in 2020 it disclosed that members "consistently earned 20% to 30% more miles than they redeem." The money supply grows faster than redemption by design.

The member side tells the same story. The Point of Loyalty's 2026 survey found 93 per cent of Australians belong to at least one program, that people name 3.8 memberships unprompted and 10.1 when shown a list, and that only about half actively use the programs they hold. CommBank's research found 89 per cent of Australians earn rewards every month but only 47 per cent redeem every month. More than a third have been unable to redeem points before they expired. Everyday Rewards has 10.8 million active members, Flybuys about 10 million, Velocity more than 13 million, CommBank Yello more than nine million, in a country of about 21 million adults.

Ten wallets per person, half of them dormant. The stranded pool isn't a rounding error. It's the normal state of the system. And it's audited: at the end of 2025 Delta carried US$9.3 billion of unredeemed points as deferred revenue, United US$7.8 billion, American US$10.6 billion. About US$27.6 billion between three airlines. A widely quoted figure puts the whole US pool at US$140 billion; the original source can't be found, so treat that as an order of magnitude. The airline filings are fact.

3. When points buy less

Every currency issuer manages the same balance: what it issues against what it redeems. When the cost of honouring points rises, programs adjust what each point buys. In loyalty that's called a program change. In economics it's inflation, and naming it that way is useful, because it shows how much programs already think like currency managers. One fintech CEO put it this way: points are "a kind of shadow currency in the consumer economy" that "now experience something similar to inflation."

The Australian record of the last eighteen months is unusually dense. In August 2025 Qantas raised Classic Reward prices for the first time since 2019: around 15 per cent in economy, up to 20 per cent in international premium cabins; Sydney to London economy went from 55,200 to 63,500 points. Velocity raised domestic award prices in January 2025, cut earn rates in April, and trimmed status benefits from October. Amex Australia cut most airline transfer rates from 2:1 to 3:1 in December 2025. Then, from 1 October 2026, after the Reserve Bank cut credit card interchange and banned surcharges, removing an estimated A$660 million a year of issuer revenue, the banks cut their points: CommBank's rate to Qantas went from 2.5 to 3, Westpac's to Velocity from 3 to 4, NAB's from 2 to 3. The RBA's own paper predicted exactly that: issuers "may respond by reducing the benefits available on their consumer credit cards, such as lowering rewards points."

These are rational responses to rising costs, and in 2026 much of the change was driven by regulation, not choice. They're also the clearest evidence that points behave as money. Only a currency can be devalued. But they compound the portability problem: a member who can't move a balance feels every adjustment, and many disengage. Programs lose that member's attention at exactly the moment they most want it.

4. Why it doesn't move: the closed-loop map

Australia has five big loyalty currencies: the two airlines, the two supermarket programs, and the pool of bank and card points. The map of what can flow between them fits on one diagram.

There are three kinds of sanctioned movement. Supermarket points flow one way into an airline at a fixed rate: 2,000 Everyday Rewards points become 1,000 Qantas Points; 1,000 Flybuys become 500 Velocity. Bank points flow one way into airlines and retailers at the bank's rate, which the bank changes when it needs to. And inside a single issuer, points are getting easier to spend: Flybuys now takes up to $100 off a Coles shop, Westpac applies Altitude points anywhere Mastercard is accepted, CommBank Yello converts to cash in a CommBank account.

Those last moves matter, and they all point the same way. Every issuer is making its own currency more spendable inside its own loop, because members ask for it and dormant balances are a cost. Qantas reported gift card costs up A$66 million in FY26 after introducing a cash payment option, and points redeemed on the ground up 12 per cent. The demand for portability is visible in every issuer's own numbers.

But nothing flows between loops in the direction members want. Nothing between the airlines, nothing between the supermarkets, nothing from any program to a shop that isn't already a partner. The member is asked to be the integration layer, carrying ten systems in their head. Most don't. The money is there. The pipes aren't.

5. The currency that already moves

One instrument in this landscape already behaves like portable money, and it sits on a rack at the supermarket checkout. The gift card is a closed-loop currency too, but its loop is a merchant rather than a program, and it has three things points lack.

It's denominated in dollars: a $50 Woolworths card is worth $50 at Woolworths. It's regulated: since November 2019 the Competition and Consumer Amendment (Gift Cards) Act has required most Australian gift cards to last at least three years, show the expiry date, and carry no post-purchase fees. Treasury estimated expiry had been costing Australians about A$70 million a year before that. And it already has a mature supply chain: retailers, distributors and the programs' own catalogues have traded gift cards at scale for two decades, so a rail plugs into existing plumbing rather than inventing it.

The category is large and still growing. Australian gift card sales were about US$8.1 billion in 2025, heading for US$12.9 billion by 2030. Behaviour has shifted with it: Tillo's 2026 research found 79 per cent of US adults have bought a gift card for their own use, 42 per cent did it to redeem a reward, and a majority would pick a gift card over cashback. Every major Australian program already sells gift cards inside its own catalogue, which tells you members ask for them. What no program offers is a way to get there from someone else's points.

6. Every store of value eventually got rails

The history of money since the 1970s is mostly the history of rails. Bank money moved by paper and telex until SWIFT gave banks a common standard in 1973. Card networks turned a piece of plastic into something that spends anywhere. Australia's New Payments Platform made transfers instant in 2018. The Consumer Data Right gave you the legal right to move your banking data in 2020. Stablecoins put the dollar on programmable rails and passed US$300 billion. And in 2025 and 2026 Visa and Mastercard built the rails for AI agents to pay on your behalf.

Three things happened every time. Idle value started to move. The people who built the rails were paid for the movement, on an enormous volume. And the market grew, because liquidity creates demand. People use money they can use.

Loyalty is the last big pool of consumer value without rails between the loops. Not for technical reasons; a points balance is a number in a database. For structural ones: each program was built to serve its own members, building rails between programs was nobody's job, and nobody else can build them without the issuer's permission. So loyalty rails will look less like a marketplace for points and more like a card network: a sanctioned partner programs choose to join because it makes their currency more useful and wins them customers, while control stays with them.

7. The gift card as the first rail

If you were designing the first rail for loyalty value, you'd want a destination that is dollar-denominated, legally standardised, instant, broad enough to cover fuel, groceries, dining and retail, and already supplied at scale. That's a description of the digital gift card.

The rail connects a member's programs on one side to a gift card network on the other. The member sees every balance, in dollars, in one place. They pick a card. The program confirms the points debit; nothing is issued until it does. The card lands in seconds and is spent at the shop. The program settles the redemption and gets a statement that reconciles line by line.

Notice what the program doesn't give up: the member relationship, the data, the decision about what can be redeemed and at what rate, and the right to pause. The rail doesn't create a new currency, doesn't hold member funds, doesn't let points be sold to strangers, doesn't touch the program's core system. It's a redemption channel the program switches on, with controls its finance and legal teams can live with. That's the difference between a rail and a grey market.

The outcomes line up for everyone. The program clears a redemption it would otherwise have carried as a liability. The member gets dollars where points would have expired. The retailer gets a customer it might never have reached; nine in ten people say a gift card makes them more likely to try a new brand. And the rail is paid the way infrastructure is always paid: for what moves across it. I've left the commercial terms out on purpose. They're ours, and they're not the argument.

8. Who wins when value moves

The rail sits in the middle of a three-sided market. Members bring the currency, which is the liquidity. Programs bring permission and clear a liability. Retailers bring the brands and gain the customer. The rail is paid only when value moves, which aligns it with redemption rather than breakage: every incentive it has points towards making movement easier, safer and bigger.

That's why rails get built by a neutral party. Visa wasn't built by one bank. SWIFT was built by banks together, because a shared rail serves every institution better than each building its own. Loyalty needs the same neutral layer, working for programs rather than around them.

9. The objections

Why would a program join? Because redemption is where loyalty pays. McKinsey found members who redeem spend about 25 per cent more than inactive members, and Bond's 2026 research found 85 per cent of US program members are more likely to stick with a brand that runs a program. Programs are already investing in more ways to spend: in July 2026 Coles raised Flybuys pay-with-points to $100 a shop. A rail adds reach a program couldn't build alone, with no build on its side and the program in control of every redemption. And the environment points the same way: accounting standards make unredeemed balances visible to boards, and the RBA's 2026 reforms have asked every bank program to deliver more member value for less. The programs that join first will win and keep the members others risk losing.

It's just points arbitrage with a nicer interface. No. Arbitrage moves points between strangers against the program's terms. A rail moves a member's own points, with the program's confirmation, to a redemption the program has sanctioned. That distinction is the whole business.

Banks will do pay-with-points and make this redundant. Westpac, CommBank and Coles already do versions of it. They're good features and they prove demand. But each is one issuer, one currency, with the issuer setting the rate. None helps someone with Qantas, Flybuys and NAB points who wants a Woolworths voucher. A rail across programs is a different product from a feature inside one.

Why hasn't somebody done it already? Because it's hard legally and commercially, not technically. You need issuer partnerships, an authorised gift card supply with brand approvals, identity and fraud controls fit for a category fraudsters love (Forter reported loyalty fraud up 89 per cent year on year in 2019), and an audit trail a program's finance team will accept. That's a long list. It's also a moat.

10. Why AI agents make this timely

Until now the member has been the integration layer: a person who remembers ten logins and does the conversion maths. That person is about to be replaced by software. Mastercard's Agent Pay and Visa's Intelligent Commerce let an AI agent act for you at checkout; Visa expects millions of people to be buying through agents by the end of 2026. OpenAI and Stripe shipped agentic checkout in September 2025. In May 2026 Shopify reported orders from AI-powered search up nearly thirteen-fold.

An agent will treat every store of value you own as spendable, as long as it can see it and move it. Bank balance, card, stablecoin wallet, gift cards: all have APIs and rails. Points behind a portal login with no outbound path will be invisible to the agent, and invisible value is value that never gets used. I couldn't find a single airline or retailer, anywhere, that lets a third-party agent redeem points today. The stranded pool won't shrink in the agentic era. Without rails it grows, because the one party who occasionally remembered to redeem, the human, has stepped back.

That makes rails an opportunity for programs, not a threat. The programs whose points an agent can see and spend will be the programs agents choose.

11. What we've built

This would be theory if the rail only existed on paper. It doesn't. Over the past eighteen months Mavitra has built the platform, and it's now in early access in Australia: a member app designed to show every connected balance in dollars and turn points into gift cards in one step; a partner portal where a program sees exactly what has moved, with statements that reconcile; and an operations console behind both where every action, from a registration to a redemption to an email, runs as a logged, auditable job. Our own stack, on Azure, an API at the centre, and a catalogue of hundreds of Australian gift card brands being integrated through an authorised global distributor.

Mavitra's purpose is simple: help everyone in the industry get more from loyalty. Programs win and keep customers, retailers gain new ones, and members get real value from what they've earned. We work with programs, never around them. Early access is open, members are registering, and conversations with the first loyalty programs have started. Those first engagements are designed to produce the evidence this article doesn't yet have: redemption rates, time-to-redeem and retention against each program's baseline. I'll publish what we find.

I've kept the mechanics out of this deliberately. The argument should stand on public evidence, and the parts that are ours are ours. But the platform is built and the first integrations are under way, and the question is shifting from whether loyalty value can move to how fast the industry decides to let it.

12. Argue with me

Loyalty points pass the tests of money and fail the test of movement. The failure is structural, it's nobody's fault, and it costs everyone: members lose value, programs lose engagement, retailers miss customers. Every other store of value got rails and the market grew. Loyalty is the last one without them, the digital gift card is the first practical rail, and AI agents make it timely.

I'd rather be argued with than agreed with. If you issue points, hold them, distribute gift cards, regulate any of this or invest in it, tell me where this is wrong. I'm collecting every response in one place, on LinkedIn, and I'll answer all of them. The full research monograph, in thesis format with all fifty references, is below.