Coalition loyalty economics: partner funding, exchange rates and period close
Resources · Finance
Coalition loyalty economics is the set of rules that decides how value is split between the brand that leads a points program and its partners: who issues and who pays for each point, the rate at which points convert between programs, how co-funded promotions are shared, and how each period is reconciled and closed.
- BankReleases 1,000 points
- Swap2:1 rate
- AirlineCredits 500 miles
The close
- Co-fundingHalf bank, half merchant
- LedgerEach party's share
- ManagerEntries and clearing
- IssuanceEach partner issues
- 2:1Swap on the ledger
- CloseClearing from Manager
In production: airlines
SKY Plus runs its partner coalition on Qurable.
More than 70 partnerships and 50,000 daily partner transactions, integrated in real time with the airline's reservation system.
- 70+PartnershipsIn the SKY Plus program
- 50,000Daily partner transactionsSKY Plus
- 1.7M+Active membersSKY Plus
- 18MMembersAcross programs running on Qurable
Key takeaways
- A coalition can share one currency or connect separate programs through an exchange rate.
- Every point that circulates creates a value flow between two parties, each with its price and its record.
- When the rules are in the coalition contract, each period close is a check, not a negotiation.
Two models
One shared program or connected programs.
There are two ways to build a coalition: every brand issues and redeems the same currency, or each brand keeps its own program and connects it to the others through an exchange rate. The economics differ in each case.
| Shared program | Connected programs | |
|---|---|---|
| Who issues the point | The lead brand; partners buy points from it to reward their own customers | Each brand issues its own currency |
| Where the liability sits | Mostly with the lead brand, which stands behind redemption | With each program, for its own points |
| How value moves between brands | Points sold to partners, and a payment for each redemption at a partner | Points exchanged at the rate each program sets |
| What has to be reconciled | Points sold, issued and redeemed per partner | Points out and points in for every exchange, with the rate applied |
| When it fits | An anchor brand with high purchase frequency, such as an airline or a retailer | Brands that already run their own program and want to keep it |
Reconciliation and close
What to record in each flow to close without spreadsheets.
A period close is only as good as the records behind it. When every movement keeps who originated it, at what rate and for which campaign, reconciliation runs on data instead of spreadsheets.
| Aspect | Detail |
|---|---|
| What to record | Partner, number of points, price per point and date of sale. |
| What to control | That the points a partner gives out never exceed the points it bought. |
| What to record | Member, partner, purchase, points issued and the batch with its expiration date. |
| What to control | Caps per partner and per campaign. |
| What to record | Points redeemed, the partner where they were used and the agreed value per point. |
| What to control | That each redemption draws on valid batches and can be reversed. |
| What to record | Points out, points in and the rate applied at that moment. |
| What to control | That the exchange completes in full or not at all, and that a retry never duplicates it. |
| What to record | The benefit granted and each party's contribution, per campaign. |
| What to control | Each party's budget and its cap. |
| What to record | The net balance between each pair of parties and the detail behind it. |
| Who pays | Payment happens outside the program: each company pays or collects its balance through its own banking channels, under the coalition agreement. |
Value flows
Five flows that drive coalition economics.
Every point that moves through a coalition creates a value flow between two parties. Define each one, with its price and how it is recorded, before you sign the first partner.
Issuance
Partners buy points
A partner pays the lead brand for every point it gives its customers. The selling price usually covers the expected cost of redemption plus a margin.
- Illustrative example
- If a point costs USD 0.01 when redeemed, a partner might buy it at USD 0.012.
Redemption
Partners get paid for redemptions
When a member redeems at a partner, whoever issued the point pays that partner the agreed value per point redeemed.
- Illustrative example
- 500 points redeemed at USD 0.01 means USD 5 owed to the partner.
Exchange
Points from one program to another
Members move points between programs. Each program sets the rate at which it gives and takes points, based on its cost and its strategy.
- Illustrative example
- 1,000 bank points become 500 airline miles: a 2:1 rate.
Co-funding
Promotions paid by two parties
A promotion is funded by two or more parties at an agreed split, and each party's contribution is recorded per campaign.
- Illustrative example
- A USD 6 cashback paid 50% by the bank and 50% by the merchant.
Close
Reconciliation by period
At the end of each period, flows are totaled per partner and a net balance is calculated between each pair of parties, then paid outside the program.
- In practice
- One net balance per partner and campaign, backed by every movement.
Before launch
Six decisions that set the economics.
When these rules are written into the coalition agreement, each period close becomes a check rather than a negotiation.
Point value
What a point is worth at redemption: the basis for every other price.
Price to partners
What a partner pays per point, and the margin it leaves over the cost of redemption.
Each program's rate
At what rate each brand takes and gives points, and how often it is reviewed.
Co-funding rules
What share each party pays, and the cap per campaign.
Close cadence
Monthly or per campaign, at what level of detail, and who signs off at each company.
Liability treatment
How each party accounts for unredeemed points; each company's accounting team decides.
With Qurable
The coalition on one ledger, with every contribution recorded.
Qurable records every coalition value flow in a double-entry ledger. The ledger calculates each party's contribution, and your team closes each campaign from Qurable Manager. Qurable doesn't move funds.
Exchange at each brand's rate
Between programs running on Qurable, an exchange is a single atomic ledger movement: it completes in full or not at all.
See the loyalty coalitionSelling points to partners
A partner buys points to reward its customers, and the sale is recorded in the ledger, with each program's liability in real time.
See the points ledgerCo-funded promotions
The ledger records each party's contribution and the points issued per campaign; entries and clearing are done from Qurable Manager.
See co-funded cashbackSKY Plus, in production
More than 70 partners, 50,000 daily partner transactions and more than 1.7 million active members.
Read the SKY Plus case
FAQ
What people ask about coalition economics.
For loyalty, finance and partnership teams building or reviewing a coalition loyalty program.
It is the set of rules that decides how value is split between the lead brand and its partners in a coalition program: who issues and pays for each point, the exchange rate between programs, how co-funded promotions are shared and how each period is reconciled and closed.
As a rule, whoever issues it. If a partner rewards its customers with coalition points, it buys those points from the lead brand. When a member redeems at a partner, whoever issued the point pays that partner the agreed value. The coalition agreement sets the price of each flow.
Start from each point's redemption value. For example, if a bank point is worth USD 0.005 and an airline mile is worth USD 0.01, a 2:1 rate preserves value. Each program can adjust its rate for its cost, its liability and its strategy, and the rate should be reviewed periodically.
Points sold, issued, redeemed and exchanged per partner, each party's contribution to co-funded promotions, and the net balance between each pair of parties. That balance is paid outside the program, through each company's own banking channels and under the coalition agreement.
Under IFRS 15, a company that issues points as part of a sale usually defers a portion of revenue until redemption; selling points to a partner and paying for redemptions have their own treatment. This is not accounting advice: each company's accounting team and auditor decide the treatment.
No. Qurable records every flow in the ledger and calculates each party's contribution, the points issued and the rate of each exchange. With that, your team posts the entries and clears each campaign from Qurable Manager. Qurable doesn't move funds between parties.
Yes. SKY Plus, SKY Airline's frequent flyer program, runs on Qurable with more than 70 partners, 50,000 daily partner transactions, more than 1.7 million active members and 210,000 flights processed per month.
Last reviewed
Further reading
Keep reading about loyalty coalitions.
Pages where the coalition shows up in the product and at a client.
- ModuleLoyalty coalition
Points exchange between programs, partner redemption and co-funded promotions.
- CaseThe SKY Plus case
An airline coalition with more than 70 partners.
- ModulePoints ledger
Every point with its origin, its batch and its expiration date.
- ModuleCashback at the moment of payment
How it is co-funded by the bank and the merchant.
- ResourcePoint value
How to work out what a loyalty point is worth.
Building or reviewing a coalition?
In a 45-minute technical session we show you how each value flow is recorded and closed, with a case like yours.