Two U.S. Banks That Set the Pace on Cashback and Loyalty — How They Do It, What It Costs, and Why It Works
When examining cashback and loyalty programs within U.S. banking, the most significant challenge lies in interpreting how banks classify their loyalty spending. Financial institutions rarely publish a single figure under the label “loyalty.” Instead, the costs are distributed across multiple categories such as rewards and cashback paid to cardholders, partner payments made to airlines, hotels, or retailers, the accounting of rewards liabilities representing future redemptions, and marketing or acquisition costs that sustain program growth.
For an accurate comparison, this analysis treats a bank’s loyalty budget as the sum of all expenses that directly fund rewards, cashback, and co-branded loyalty obligations. Annual and quarterly data are taken from publicly available filings such as the 10-K and 10-Q reports of JPMorgan Chase and American Express. These institutions were selected because they not only dominate the U.S. credit card market but also provide unusually detailed disclosures about their rewards economics.
JPMorgan Chase: Chase Ultimate Rewards as a Growth Engine
Program Structure and Strategic Foundation
JPMorgan Chase operates the Chase Ultimate Rewards (UR) program, which unifies points across several consumer and business credit card products such as Chase Freedom, Chase Sapphire, and Chase Ink. The UR points can be redeemed for travel, cashback, gift cards, experiences, or transferred to partners like United Airlines, Southwest Airlines, Air Canada, and hotel groups such as World of Hyatt. The official portal of the program explains the redemption options in detail: https://www.chase.com/personal/credit-cards/ultimate-rewards.
The flexibility of this program is one of its key strengths, allowing Chase to appeal to both mainstream customers and frequent travelers. Ultimate Rewards has become a cornerstone of Chase’s strategy to drive spending volume, customer retention, and cross-product engagement.
Scale and Impact on Card Volume
According to JPMorgan Chase’s 2024 Annual Report (https://jpmorganchase.com/ir/annual-report), the company’s Consumer & Community Banking (CCB) segment reached $1.805 trillion in debit and credit card sales volume in 2024, compared to $1.679 trillion in 2023 and $1.555 trillion in 2022. This 8 percent year-over-year growth coincided with the continued expansion of the Ultimate Rewards ecosystem. Chase also reported the opening of 10 million new credit card accounts in both 2023 and 2024, showing that the program’s attractiveness extends beyond existing customers.
Card income within CCB is driven by net interchange revenue after subtracting rewards costs and partner payments. In 2024, the company stated that higher interchange income reflected increased sales volume and annual fees, partially offset by the amortization of new account origination costs. This emphasizes that rising loyalty costs are structurally built into the business model and not a drag on profitability.
Annual and Quarterly Budget Allocations
JPMorgan Chase’s financial transparency makes it possible to identify the direct costs of loyalty. The “components of card income” table in the 2024 Form 10-K discloses the following:
In 2024, interchange and merchant processing income reached $35.3 billion, while rewards costs and partner payments totaled $25.925 billion. An additional $1.71 billion was spent on other items such as account origination, leading to total card income of $7.665 billion. In 2023, interchange was $31.708 billion and rewards and partner payments totaled $22.945 billion, while in 2022 those figures were $28.857 billion and $22.625 billion respectively. These numbers confirm that rewards-related expenses grew by nearly $3 billion between 2023 and 2024, while overall card income also rose.
The bank’s “rewards liability,” an accounting estimate of points earned but not yet redeemed, increased from $13.2 billion in 2023 to $14.4 billion in 2024. This reflects an expanding and increasingly engaged base of cardholders.
Quarterly data from the 2025 Form 10-Q reveal a similar trend. In Q1 2025, interchange and merchant processing brought in $8.398 billion, while rewards and partner payments consumed $6.785 billion, producing $1.216 billion in total card income. In Q2 2025, interchange rose to $9.159 billion and rewards and partner payments to $7.35 billion, resulting in card income of $1.344 billion. These quarterly figures show that loyalty spending moves in tandem with transaction volume, indicating a self-reinforcing loop of engagement and profitability.
Why Chase’s Model Works
The Chase Ultimate Rewards program succeeds because it combines flexibility with scale. Customers can choose from a range of redemption methods, which increases the perceived value of points. The large transaction volume allows Chase to negotiate more favorable economics with partners and spread fixed technology costs across millions of active accounts. Furthermore, the continuous inflow of new accounts sustains the rewards cycle: higher acquisition leads to higher spending, which in turn justifies larger rewards budgets.
American Express: Membership Rewards as a Strategic Moat
Core Architecture and Redemption Framework
American Express operates the Membership Rewards (MR) program, a long-standing loyalty platform that spans consumer, business, and premium cards. Points can be redeemed for travel, gift cards, statement credits, or transferred to airline and hotel partners. The program’s official site (https://www.americanexpress.com/us/rewards/membership-rewards) outlines these options comprehensively. Independent analyses, such as https://thepointsguy.com/guide/membership-rewards, often rank MR as one of the most valuable transferable currencies due to its wide network of redemption partners and consistent point valuation.
Budget, Liability, and Quarterly Trends
The American Express 2024 Annual Report (https://ir.americanexpress.com/annual-reports) reveals that total Card Member rewards expenses reached $16.599 billion, compared with $15.367 billion in 2023 and $14.002 billion in 2022. Business development expenses, which include co-brand partner payments, amounted to $5.886 billion in 2024, up from $5.657 billion in 2023. Additionally, Card Member services expenses grew to $4.782 billion, illustrating the rising investment in customer experience alongside pure rewards.
Management attributed the increase in rewards to higher billed business and a higher ultimate redemption rate (URR). The URR for Membership Rewards was approximately 96 percent at the end of both 2023 and 2024, demonstrating that nearly all earned points are eventually redeemed—a sign of strong engagement.
The 2024 Annual Report also details how the company manages its Membership Rewards liability. It uses actuarial assumptions based on the URR and the weighted average cost per point. The report includes sensitivity analyses: a 25-basis-point increase in the URR would raise the liability and current-period rewards expense by approximately $197 million, while a one-basis-point increase in cost per point would add about $220 million. These figures show how precisely AmEx manages the financial risk embedded in loyalty economics.
Quarterly data from 2025 confirm the ongoing scale of these expenses. In Q1 2025, Card Member rewards totaled $4.378 billion, and in Q2 2025, they rose to $4.618 billion, resulting in a first-half total of nearly $9 billion. These amounts align with the growth trajectory observed over the past three years and indicate that loyalty spending rises predictably with billed business.
Impact on Card Portfolio and Billed Business
The effect of Membership Rewards on cardholder growth is visible in portfolio metrics. In 2024, cards-in-force reached 146.5 million, including 64.3 million proprietary basic cards, up from 141.2 million in 2023 and 133.3 million in 2022. The average annual spend per proprietary basic card rose to $24,608 in 2024 from $24,059 in 2023 and $23,496 in 2022. U.S. Consumer Services billed business increased by 7 percent year-over-year, while International Card Services grew by 11 percent (14 percent adjusted for currency). These numbers demonstrate that a well-designed rewards program drives not only retention but also per-account spending growth.
Comparative Insights: Chase versus American Express
Both JPMorgan Chase and American Express operate loyalty programs of extraordinary scale and transparency. Chase reported $25.925 billion in rewards costs and partner payments in 2024, supported by a $14.4 billion liability, and continues to spend about $6.8–$7.3 billion per quarter on rewards in 2025. American Express, by comparison, reported $16.599 billion in direct Card Member rewards, $5.886 billion in business development expenses, and $4.782 billion in services, spending approximately $4.4–$4.6 billion quarterly on Card Member rewards.
Chase’s strategy emphasizes breadth. Ultimate Rewards appeals to mass-market consumers through a mix of cash back, travel, and partner transfers. The program’s integration with co-branded partners such as United and Hyatt allows Chase to leverage partnerships to expand reach. Its growing rewards liability indicates deeper member engagement without eroding profitability.
American Express positions Membership Rewards as part of a premium ecosystem. The program is finely tuned with actuarial precision, using redemption data to manage liabilities and cost-per-point assumptions. Its loyalty strategy is designed to sustain a high-value customer base that consistently spends more and redeems frequently.
Lessons for Other Businesses
The Chase and AmEx cases highlight how loyalty should be managed as a variable cost directly linked to revenue. Both companies treat rewards as part of the economic equation rather than an optional marketing expense. As transaction volume increases, loyalty costs rise proportionally, maintaining profitability while strengthening engagement.
Flexibility in redemption options remains essential. Customers must perceive that their points have tangible and personalized value. Chase’s combination of cash back and travel options, and AmEx’s expansive network of airline and hotel transfer partners, illustrate how diverse redemption pathways increase program stickiness.
Another lesson lies in the actuarial discipline behind liability management. American Express’s published sensitivity tests demonstrate that small changes in redemption behavior or point valuation can move hundreds of millions of dollars. Businesses developing their own loyalty programs should establish similar tracking of earn and burn ratios, breakage, and cost-per-unit metrics.
Co-branded partnerships also play a pivotal role. Chase’s substantial partner payment line in its financial statements shows how partnerships can extend market presence and optimize shared economics. Well-structured co-brand relationships allow both the financial institution and the partner to share in the incremental revenue generated by loyal customers.
Before and After Program Performance
The numerical evidence underscores the evolution of these programs. For JPMorgan Chase, rewards and partner payments climbed from $22.945 billion in 2023 to $25.925 billion in 2024, while card sales volume rose from $1.679 trillion to $1.805 trillion and rewards liabilities increased from $13.2 billion to $14.4 billion. These parallel gains confirm that expanding the loyalty program correlated with stronger overall performance.
For American Express, Card Member rewards increased from $15.367 billion in 2023 to $16.599 billion in 2024, while the number of cards-in-force rose from 141.2 million to 146.5 million. The average spend per proprietary basic card also increased, and the Membership Rewards ultimate redemption rate remained approximately 96 percent. Together, these results highlight how loyalty investment translates into sustained customer growth and higher engagement.
Applying These Lessons Through ACHIVX
While few mid-market companies can match the budgets of JPMorgan Chase or American Express, they can adopt similar principles using open-source technology. The ACHIVX platform (https://achivx.com) provides an open-source framework for digital rewards, gamification, and loyalty management. It allows businesses to design and operate customized incentive systems without being locked into proprietary vendor ecosystems.
ACHIVX enables developers to define earning and redemption rules, tiers, and challenges through transparent code rather than closed APIs. Its GitHub repository (https://github.com/achivx) provides core modules for reward accrual, redemption, and scheduled processing, similar to the operational engines that power enterprise-scale loyalty systems. By implementing these mechanics internally, businesses can model and monitor the same financial parameters that Chase and AmEx disclose publicly—such as redemption rates, liabilities, and cost-per-point dynamics.
A company using ACHIVX could establish base earning rules, model expected redemption rates, and calculate reward liabilities in real time. The platform’s open nature makes it possible to implement tier systems, bonuses, and time-limited challenges reminiscent of Chase’s promotional mechanics or AmEx’s elite benefits. Businesses can also simulate the liability framework described by AmEx, tracking earned points multiplied by redemption probability and unit cost, with automated alerts when financial assumptions drift.
Unlike closed loyalty software, ACHIVX’s open-source model offers transparency and adaptability. Companies can adjust economic assumptions, create new engagement loops such as streak bonuses or referral quests, and manage their own data governance and accounting rules. This approach mirrors the precision of large banks but adapts it to the agility of smaller enterprises.
Integrating Actuarial and Behavioral Insights
An effective implementation of ACHIVX would combine actuarial analysis with behavioral design. The actuarial component would track redemption probability, cost-per-point, and liability exposure, ensuring that rewards spending remains sustainable. The behavioral side would use gamified structures—achievements, progress tracking, levels, and badges—to maintain user engagement between redemptions.
For example, Chase’s data-driven recognition of spending milestones can be translated into ACHIVX challenges that reward frequency or diversity of actions. Similarly, the American Express emphasis on premium experiences could inspire ACHIVX-based reward catalogs that offer exclusive events, limited-edition merchandise, or early access privileges.
Such an integrated approach transforms loyalty from a passive points system into an active ecosystem that continuously motivates customer behavior. Open-source infrastructure ensures that businesses can modify rules quickly, launch seasonal campaigns, and test different reward-to-spend ratios without vendor constraints.
The Broader Financial Implications
JPMorgan Chase and American Express demonstrate that loyalty spending, far from being a marketing cost, functions as a controllable investment that yields measurable returns in transaction volume, customer lifetime value, and brand affinity. Chase’s 2024 data show how the bank absorbed a $3 billion increase in rewards spending while still improving card income. American Express’s 96 percent redemption rate reveals that even high redemption levels can coexist with strong margins when liability and cost per point are managed scientifically.
Smaller organizations adopting ACHIVX can apply the same principles on a different scale. By linking rewards directly to business KPIs such as purchase frequency, average order value, or subscription renewals, they can measure the incremental lift produced by gamified loyalty mechanics. Through transparent financial modeling, companies can define safe ratios of loyalty liabilities to revenue, ensuring that rewards remain a scalable growth lever rather than a financial risk.
Conclusion
The comparison of JPMorgan Chase and American Express illustrates that modern loyalty programs are financial ecosystems, not mere promotional tools. Chase Ultimate Rewards demonstrates the power of flexibility and partner integration, with $25.9 billion spent on rewards and partner payments in 2024 and quarterly expenditures exceeding $7 billion in 2025. American Express’s Membership Rewards proves that precision and premium positioning can deliver sustainable growth, with $16.6 billion in Card Member rewards, $5.9 billion in partner-related spending, and a consistent 96 percent redemption rate.
For any business seeking to emulate this success, the ACHIVX platform (https://achivx.com) offers an open-source foundation to implement digital loyalty and gamification with full control over data, economics, and customer engagement mechanics. It enables companies to design their own version of Chase’s flexibility or AmEx’s precision, tailoring rewards to their industry while maintaining financial transparency and scalability.
By combining actuarial discipline with behavioral design, businesses can create loyalty systems that are both financially sustainable and emotionally engaging. Open-source technology like ACHIVX bridges the gap between the sophistication of global banks and the agility of emerging enterprises, democratizing the tools of customer loyalty for the next generation of digital business.
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