Loyalty programs in India are undergoing a transformation, fuelled by rapid digital adoption, evolving consumer expectations, and the widespread use of smartphones and digital wallets. 

With the loyalty market projected to grow at an annual rate of 18.3%, reaching $3.58 billion by 2025, businesses are doubling down on rewards-based engagement strategies to drive customer retention. This market is expected to record a CAGR of 15.6% during 2025-2029 and is expected to more than double by 2029 to $6.40 billion, reflecting the increasing demand for personalised and data-driven loyalty solutions.

Quite a few brands have taken the lead and have integrated multi-brand partnerships across retail, banking, travel, and e-commerce, offering tailored rewards that enable customer retention. As competition intensifies, businesses are leveraging cutting-edge technologies like AI, blockchain, and mobile-first strategies to deliver seamless and engaging loyalty experiences.

Moreover, India’s booming middle class – set to reach 580 million by 2025 – is driving higher spending, further boosting demand for innovative loyalty programs. From instant cashback to hyper-personalised rewards, companies are redefining customer engagement through advanced data analytics and strategic partnerships.

As regulatory frameworks evolve, businesses must navigate compliance challenges while ensuring transparency and trust. The future of loyalty programs in India is brimming with potential, promising greater personalisation, enhanced digital integration, and deeper customer relationships in the years ahead.

Key Trends

As India’s loyalty market expands at a rapid pace, several key trends are reshaping how brands engage and retain customers. Driven by technological advancements, evolving consumer expectations, and a growing demand for hyper-personalised experiences, loyalty programs are becoming more dynamic, data-driven, and seamlessly integrated into everyday transactions.

From AI-powered personalisation to blockchain-backed security, businesses are leveraging cutting-edge innovations to enhance customer engagement, boost retention, and maximise lifetime value. As consumer preferences shift toward instant rewards, seamless digital experiences, and value-driven incentives, brands must stay ahead of the curve by adopting more flexible, transparent, and customer-centric loyalty strategies.

These emerging trends signal a fundamental transformation in how businesses build long-term relationships, making loyalty programs a powerful tool for sustained growth in India’s competitive market.

1. Use of Artificial Intelligence and Data Analytics for Personalisation

Artificial intelligence (AI) is revolutionising loyalty programs in India, enabling brands to deliver hyper-personalised rewards, predict customer behaviour, and enhance engagement at scale. With the rise of big data and advanced analytics, companies are moving beyond generic reward structures to tailored experiences that resonate with individual consumers. Furthermore, India’s expanding digital infrastructure has made these advanced technologies more accessible to businesses of various sizes.

Leading brands are already leveraging AI to optimise customer interactions. Myntra’s “Myntra Insider” program curates personalised discounts and exclusive offers based on shopping history, while BigBasket tailors’ rewards to individual preferences, offering category-specific promotions on groceries and household essentials. 

By 2027, most large brands in India are expected to integrate AI-powered personalisation into their loyalty programs that would be able to anticipate consumer behaviour, leading to a 15-20% increase in customer retention rates. The future lies in real-time engagement, whereby by 2028, 75% of loyalty programs will use AI to deliver instant, predictive rewards at the right moment, driving higher conversions and deeper brand loyalty.

However, as AI continues to shape loyalty ecosystems, brands must navigate data privacy regulations carefully. The key to success will be balancing personalisation with transparency, ensuring customers receive tailored experiences without compromising trust.

2. Mobile Integration

With 900 million smartphone users expected in India by 2025 (according to the IAMAI and KANTAR report), mobile integration has become a game-changer for loyalty programs. Consumers are moving away from traditional loyalty cards, embracing seamless, app-based reward systems that offer convenience, instant access, and personalised offers. 

Digital payment platforms like Paytm and PhonePe have embedded loyalty ecosystems where users earn and redeem rewards through everyday transactions in the form of cashback or vouchers. Similarly, leading retailers and e-commerce brands are leveraging mobile apps to track points, deliver exclusive offers, and enhance real-time engagement, making loyalty programs more accessible and appealing.

This trend is set to accelerate as businesses harness AI and data analytics to refine mobile-first rewards. By 2027, most loyalty programs in India will be fully integrated into mobile platforms, offering personalised rewards, instant redemptions, and frictionless user experiences—ensuring brands stay connected with consumers anytime, anywhere.

3. Cross-Industry Loyalty Partnerships

As competition intensifies, Indian brands are forging cross-industry partnerships to create more valuable, flexible and versatile loyalty programs. Partnering with companies from diverse sectors allows them to provide customers with a wider array of rewards while also distributing the costs of reward fulfilment more efficiently. These strategic alliances allow customers to earn and redeem points across multiple sectors, enhancing engagement and fostering long-term brand loyalty.

Programs like HDFC Bank’s “SmartBuy” exemplify this trend, offering rewards across travel, retail, and entertainment by partnering with Amazon, BookMyShow, and Myntra. Similarly, global firms like American Express are strengthening their loyalty foothold in India through initiatives like Reward Xcelerator, while domestic players like Zillion, the multi-brand loyalty programs firm, are pioneering multi-brand rewards platforms.

With India’s booming consumer market and rising disposable incomes, the demand for interconnected, cross-brand loyalty ecosystems is expected to grow further. By 2027, there is expected to be a surge in co-branded loyalty ventures, spanning retail, fintech, travel, and lifestyle, offering consumers a seamless and rewarding experience across industries. However, managing these partnerships effectively will require close coordination and clear agreements on data sharing and customer privacy.

4. Gamification

Gamification is revolutionising loyalty programs in India, transforming routine transactions into engaging experiences. By incorporating challenges, leaderboards, and achievement-based rewards, brands are capturing consumer attention—especially among younger audiences who crave interactive engagement.

A prime example is Swiggy’s “Super” program, which introduced gamified challenges like ordering from new restaurants or referring friends to unlock exclusive discounts. This approach boosted user engagement by 40%, proving that an interactive, fun-driven rewards system can significantly enhance customer retention.

By 2027, over 50% of healthcare and fitness brands are expected to integrate gamified loyalty programs, incentivising users to achieve health goals through milestone-based rewards. With AI-driven insights, brands will craft tailored gamification experiences, ensuring customers remain actively engaged with their loyalty programs.

As digital adoption accelerates, gamification will continue to redefine how Indian consumers interact with loyalty programs, making them not just transactional but truly immersive.

5. Adoption of Subscription-based Loyalty Programs

Subscription-based loyalty programs are gaining traction in India as brands look to build steady revenue streams while delivering continuous value to customers. Unlike traditional rewards models, these programs offer premium perks—such as exclusive discounts, early access to sales, and free shipping—for a recurring fee, fostering deeper customer commitment.

A prime example is Flipkart’s SuperCoin Plus, which provides members with extra rewards, faster delivery, and partner benefits. This model has led to a 20% increase in membership renewals, proving that customers are willing to pay for convenience and exclusivity.

By 2026, 45% of Indian brands are expected to adopt tiered, subscription-based loyalty programs, catering to high-value customers who seek superior experiences. By 2027, 30% of B2B brands are likely to implement subscription-based models, offering benefits like industry insights, networking events, and exclusive training to strengthen client relationships.

As customer expectations evolve, subscription-based loyalty programs will become a strategic differentiator, allowing brands to create lasting customer relationships while ensuring sustained business growth.

 

6. Navigating Regulatory Changes in the Indian Loyalty Programs Market

India’s regulatory landscape for loyalty programs is evolving, requiring businesses to reassess their strategies to ensure compliance while maintaining customer engagement. Stricter rules around data privacy, consumer protection, and financial oversight are reshaping how brands design and operate their loyalty programs. The key regulatory developments are:

• Data Privacy Regulations: With the introduction of the Digital Personal Data Protection Act, companies must adopt transparent, consent-driven models for collecting and using customer data. Programs will need to enhance security measures to maintain compliance and consumer trust.
• Consumer Protection Laws: Regulators emphasise clearer communication of loyalty program terms, particularly regarding points expiration, redemption policies, and hidden fees. Misleading promotions or unclear reward structures may lead to legal scrutiny.
• Financial Oversight: Authorities are considering classifying loyalty points as taxable benefits, potentially affecting programs like ICICI Payback and Cred. This shift could influence reward structures and increase compliance costs for businesses.

With these changes, brands need to strike a balance between regulatory compliance and customer experience. By prioritising transparency, ethical data usage, and fair reward structures, businesses can enhance consumer trust while staying ahead in India’s dynamic loyalty market.

India’s loyalty landscape is poised for rapid transformation, driven by technological advancements, evolving consumer expectations, and industry-wide innovation. As brands embrace AI-driven personalisation, gamification, Web3 technologies, and subscription-based models, loyalty programs will become smarter, more engaging, and deeply integrated into daily consumer experiences. 

The future of loyalty programs in India will be defined by innovation in technology, cross-industry collaborations, and a deep focus on consumer behaviour. Brands that adapt, innovate, and prioritise customer-centric strategies will lead the next wave of loyalty evolution in India. As competition intensifies, businesses that invest in cutting-edge loyalty solutions will foster deeper connections, drive long-term engagement, and secure customer loyalty in a dynamic, digital-first future.