Debit card users in the U.S. historically have had limited opportunities to earn rewards, a benefit typically reserved for credit card holders. Many consumers prefer debit cards for everyday transactions, yet loyalty programs have largely excluded them. Now, Galileo Financial Technologies is introducing a new initiative that offers brands a way to extend rewards to their debit card customers. This move could reshape consumer spending habits by providing incentives to a broader audience, enabling businesses to engage with a wider customer base. The program aims to tap into a significant market while addressing both consumer demand and brand loyalty strategies.
Previous discussions on debit card rewards have highlighted the challenges of implementing such programs due to regulatory constraints and economic feasibility. Debit card spending in the U.S. has continued to grow, and various financial institutions have explored ways to introduce loyalty perks. However, complex banking regulations and limited profitability have often hindered widespread adoption. Galileo’s approach seeks to address these concerns by utilizing its financial services infrastructure to simplify the process for brands, making debit rewards a more viable option.
How Does the Program Work?
Galileo’s new co-branded debit card program enables companies to offer rewards to consumers for spending with their debit cards. Traditionally, loyalty programs are associated with credit cards because issuers can generate revenue through interest payments and fees. Debit cards, on the other hand, are directly linked to consumer bank accounts, which limits the ability to charge interest. By streamlining payments processing and offering integrated solutions, Galileo provides brands with an efficient way to introduce rewards without the complexities of credit-based programs.
What Industries Will Benefit?
Initially, the initiative is focused on the travel and hospitality sectors, where airlines, hotels, and other service providers can use rewards to encourage customer loyalty. The program, however, is open to businesses across all industries, including retail and other consumer-focused sectors. Expanding access to loyalty rewards beyond credit card users could drive higher engagement and spending among debit card users, particularly those without an established credit history.
David Feuer, Chief Product Officer at Galileo Financial Technologies, emphasized the market potential, stating,
“$4.3 trillion is obviously a massive market,” and adding, “this is a particularly opportune time to double down on the debit market.”
He also noted that approximately 90% of U.S. adults own a debit card, and for millions of consumers with limited or no credit history, debit cards serve as an essential payment method.
The complexity of launching a debit card rewards program has been a barrier for many brands, as debit transactions are subject to different regulatory and compliance requirements than credit cards. Feuer explained that Galileo’s platform simplifies these challenges by providing a centralized solution that combines issuing, processing, and program management.
“What we’ve done is consolidated the issuing piece, the processing piece, and the program management piece so that brands don’t have to juggle all these different vendors.”
This integration reduces the time required to launch a co-branded debit card, making it feasible for more businesses to participate.
The initiative also comes at a time when younger consumers are showing increased interest in alternative financial products. Reports indicate that Millennials are more likely than Gen Z consumers to use private-label credit cards, suggesting an opportunity to introduce similar loyalty programs through debit cards. Galileo’s strategy aligns with this trend, offering brands a way to capture demand from younger demographics who prefer debit over credit.
Financial institutions have long sought ways to reintroduce debit card rewards after regulatory changes, such as the Durbin Amendment of 2010, reduced interchange fees and limited the profitability of such programs. Feuer acknowledged these limitations but highlighted Galileo’s ability to utilize its financial services network to support sustainable reward programs.
“We see broad-based demand across multiple sectors, and particularly retail… What we’re going to be able to do is help consumers get set up to start to accrue those points and then give them the power to use those points however they want.”
This suggests that brands can offer tailored incentives, increasing customer engagement and loyalty.
As debit card usage continues to grow, Galileo’s approach presents a potential shift in how brands engage with their customers. By allowing debit cardholders to access loyalty rewards, businesses may see increased consumer retention and spending. The success of this model will likely depend on how effectively brands implement and market these programs. While challenges such as regulatory compliance and profitability remain, Galileo’s strategy offers a structured framework that makes debit rewards programs more accessible. If widely adopted, this initiative could redefine how consumers interact with loyalty programs beyond traditional credit card offerings.
