Mobile is the new co-brand

Hearing that phrase from one of APAC’s most credentialed and respected loyalty consultants this week crystallised a thesis our team had been carrying around for the past three years.

Not because the idea was new to us, but because someone from outside telco had said it plainly.

For years, we had been having versions of that conversation in side rooms, partner meetings and over beers in our regular off site strategy sessions. Co-branded credit cards had been one of the most successful loyalty products of the modern consumer economy. Banks got spend, airlines got engagement, retailers got frequency and customers got the reassuring sense that everyday transactions were building towards something more valuable.

But the economics underneath that model are changing.

Australia’s regulatory environment has been playing catch up. In the UK and Europe, interchange caps have already reshaped consumer card rewards. Now Australia is moving further in the same direction, with the Reserve Bank of Australia confirming reforms that will remove card surcharging, reduce interchange fees and increase transparency across card payments.

For decades, interchange helped fund points schemes, rewards programs and the richer economics behind premium and co-branded credit cards. That rewards funding pool has already been cut once in Australia and pundits are preparing for caps to tighten again.

 More pressure is likely to come, because once regulators decide a hidden economic subsidy is too expensive, too opaque or too unevenly distributed, it rarely returns to its heady days.

The question for banks, airlines, retailers and loyalty programs is not whether credit cards disappear from the loyalty mix. They won’t. The better question is whether they can keep relying on interchange-funded rewards to do the same job they once did. And if they can’t, what takes their place?

A mobile plan has many of the same characteristics that made the co-branded credit card so powerful. It is used every day, it is already part of the household budget, it is recurring, it is personal and it can carry a brand relationship beyond the original transaction.

Most importantly, it does not need to manufacture behaviour from scratch. Customers already pay for mobile. Families already manage multiple services across the household. Every month, people are making decisions about banking, insurance, energy, groceries, streaming, subscriptions and connectivity.

A branded mobile plan simply asks a sharper question: if a customer is already paying for connectivity, why shouldn’t that spend strengthen their relationship with a brand they already trust?

A co-branded credit card made a brand present at the point of payment. A branded mobile plan makes a brand present in the customer’s everyday life: on the lock screen, in the app, in the monthly bill, in the service relationship, in the loyalty account and in the household budget.

Mobile is particularly well placed because it sits at the intersection of utility, identity, data, membership and habit. For an airline, branded mobile could keep frequent flyers engaged between trips. For a supermarket, it could turn a weekly shopper into a monthly subscriber. For a bank, it could add household value at a time when traditional card rewards are under pressure. For an insurer, it could create a more regular customer touchpoint than an annual renewal.

That is why mobile is not just another partner offer- leveraging it this way misses the point. Pun intended.

It is not a wine deal, a shopping portal or a one-off points promotion. It is a recurring product with a monthly bill and a daily use case, which makes it structurally closer to a co-branded credit card than most loyalty extensions in the market.

The economics are different too. The old card model relied heavily on spend. The more the customer transacted, the more opportunity there was to generate interchange, issue points and reinforce the relationship. Mobile creates value through recurring service revenue, plan design, loyalty integration, customer retention and the brand’s ability to acquire customers more efficiently than a no name brand entering the market.

The other reason this moment matters is that the operating model has changed. Historically, launching a mobile network sounded too hard for most non-telco brands. Network access, billing, provisioning, SIM and eSIM operations, customer care, regulatory compliance, number porting and wholesale commercials were enough to stop the conversation before it left the innovation team.

But enablement has matured. A brand no longer needs to become a full telco from scratch to offer a branded mobile product. The right model can handle the network, systems, compliance, billing and care layer while the brand focuses on distribution, loyalty, positioning and customer experience.

That is how the idea moves from side room to boardroom.

For decades, the co-branded credit card was one of the great loyalty inventions.

The next iteration will not be plastic, will not rely on interchange and will not start with Mastercard or Visa. Although, Visa Mobile does have a very nice ring to it.