Rewards Credit Cards in the UK: A market ripe for disruption?
By Ben Baigrie
Engagement Manager

Credit card rewards have long been a staple of consumer finance in some markets, such as the US, where cashback, points, and perks are integrated into everyday spending. In Europe, however, the rewards credit card landscape differs significantly. Regulatory measures, particularly the Interchange Fee Regulation (IFR) implemented in 2015, have capped interchange fees at 0.3% for credit cards and 0.2% for debit cards. These caps have exerted downward pressure on non-interest credit card revenues, reducing the funds available for rewards programs and thereby limiting innovation and consumer choice in this space.
The Historical Landscape: limited choice, dominated by Amex
In the UK, American Express has long been the standout name in the rewards credit card space. With a portfolio that includes both free and paid-for cards, such as the British Airways and Platinum ranges, Amex has consistently delivered a strong, aspirational offering. Travel rewards, exclusive perks, and a premium and globally recognised brand have helped it cultivate a loyal customer base.
That said, the competitive landscape in Europe has traditionally been fairly narrow - particularly following the introduction of interchange fee regulation, which limited the commercial viability of rich rewards programmes for many card issuers. In this environment, Amex faced relatively little pressure to significantly evolve or reimagine its proposition. While it continues to offer a compelling mix of benefits, it has, like others, adjusted the value of some rewards, particularly on its free cards, in response to market dynamics.
For consumers, the entrance of new players into this space could prove valuable. Increased competition has the potential to drive innovation, whether through digital experience, rewards relevance, or pricing, and ultimately deliver better choice and value for cardholders.
Why Europe’s Rewards cards lag Behind
One of the key structural differences between the US and Europe lies in interchange regulation. In many markets outside of Europe, interchange fees, the slice that card issuers receive from each card transaction, is significantly higher. This allows issuers to develop richer and more comprehensive rewards programs.
By contrast, the European Union (and the UK post-Brexit, which has broadly followed similar rules) drastically capped interchange fees in 2015. This had a knock-on effect on the economics of issuing rewards cards. With tighter margins, traditional banks have had less incentive to invest in loyalty schemes, and when they have, rewards have often been watered down or restricted to premium tiers with hefty annual fees.
As a result, many rewards programs in Europe leave consumers wondering if the juice is worth the squeeze.
Enter the Challengers: Revolut and Yonder
The UK rewards credit card market is witnessing the emergence of new players aiming to disrupt the status quo. On one end, Revolut, a global fintech powerhouse with over 52 million customers worldwide, is integrating rewards into its expansive financial ecosystem. On the other, Yonder, a London-based startup with a focused user base of over 20,000, is carving out a niche by offering lifestyle-oriented rewards tailored to urban professionals. While their scales differ significantly, both are introducing innovative approaches to credit card rewards, challenging traditional offerings and potentially looking to reshape consumer expectations.
Revolut: making rewards central to the proposition
Revolut has already made waves as a digital banking alternative, offering everything from FX to crypto in a slick, mobile-first app. Now, they are reportedly preparing to launch their own rewards credit card tied to company’s RevPoints loyalty scheme which is currently for debit cards only.
RevPoints, which initially launched to support travel redemptions like flights and hotels, signals Revolut’s ambitions to build a closed-loop ecosystem where customers earn, track, and redeem rewards directly within the app. The emphasis on user experience is a notable advantage: digital challengers like Revolut are often better at creating intuitive, engaging journeys than legacy providers.
What sets Revolut apart is not just the tech. As a multi-product business, they’re not reliant solely on interchange for profitability. They can afford to offer rewards - perhaps even loss-leading ones, as a way to attract and retain customers who they expect will purchase other services, such as subscriptions, travel insurance, or wealth products. This cross-sell potential arguably gives them a different set of economics to work with.
Yonder: building loyalty through lifestyle
Yonder, a newer entrant to the UK market, has taken a more focused approach. The company targets younger, urban consumers with a card that rewards spending at local businesses, restaurants, and experiences. Their marketing reflects this bold, challenger mindset. Across social media and billboards in London, Yonder has embraced the bold tagline “Goodbye Amex, Hello Yonder” representative of their eagerness to challenge the status quo. While this messaging underscores Yonder's ambition, it's important to recognise the scale of the challenge they’ll face against established giants like Amex.
Unlike traditional reward schemes based on points and airline miles, Yonder offers something more experiential. Cardholders can redeem rewards for things that feel immediate and lifestyle-led, such as dinners out or event tickets. This relevance is perhaps especially appealing to millennials and Gen Z consumers who seek something more suited to their lifestyle.
Like Revolut, Yonder also focuses heavily on UX. Their onboarding, card management, and reward redemption are all designed to be fast, transparent, and mobile-first. NatWest recently purchased a minority stake in Yonder signalling their belief in the company’s vision and potential.
Funding rewards without interchange
So how are these challengers funding their programmes in a world of capped interchange?
The answer, perhaps, lies in a different business model. Instead of relying solely on transactional revenue, these players are looking at customer lifetime value more holistically. Rewards become an acquisition tool - a way to get people in the door and onto the platform. Once there, monetisation can come from interest, premium subscriptions, in-app purchases, FX markups (albeit highly unpopular among travellers so becoming less common), or partnerships with merchants.
This model allows for a more aggressive rewards strategy than what traditional banks can often justify, especially when legacy infrastructure and product silos have traditionally made cross-sells harder to execute.
Looking Ahead: A more dynamic market?
We may be entering a new chapter in the UK and European rewards space, one where customer experience, relevance, and ecosystem thinking start to replace the traditional points-per-spend formula.
To succeed, future entrants will need to balance economic sustainability with emotional appeal. That means understanding not only what customers want to earn, but how they want to earn it and what kind of brand they want to earn it from. In markets where consumers favour debit or alternative payment methods like account-to-account transfers, introducing a compelling rewards credit card proposition could perhaps even go as far as gradually diminishing aversion to credit.
The winners won’t necessarily be the ones with the biggest points tables or the most generous cashback. They’ll be the ones who can integrate rewards into everyday life in a way that feels seamless, satisfying, and uniquely suited to their audience.
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