The largest loyalty category by far, the most mainstream and the one that has not yet been linked to payment cards, is the simple punch card that lets a customer earn a free item or discount after a certain number of visits or dollars spent. Your favorite sandwich shop might have given you one that offers a free sandwich after buying several. You probably also have a card from your local coffee shop, your dry cleaners and perhaps the video rental store. Movie theaters give you one for free popcorn or a drink. Countless fast food restaurants use the technique to offer a free meal.
Parking lots offer free parking after paying for a certain number of days.
Besides the fact that all of these merchants use loyalty cards that are punched or stamped at each visit, they all have another thing in common. Generally, they don't favor credit cards. In other words, a tremendous market development opportunity that many card issuers would like to break into. Magnetic stripe cards were great for the large private payment card market. They were also good enough to address the even larger co-branded card market.