Loyalty Points vs Store Credit: Which Is Right for Your Shopify Brand?

If you already have a loyalty program on Shopify, choosing the right reward currency can have a bigger impact than you might think.

Most brands default to points because that's what traditional loyalty programs have always used.

But points aren't automatically the best option.

For some brands, points create a more engaging and flexible loyalty experience. For others, store credit feels more natural, more valuable and more aligned with the brand.

So which should you use?

The answer comes down to three things: the experience you want to create, the rewards you want to offer, and how your loyalty program fits into your brand positioning.

In this guide, we'll break down the differences between loyalty points and store credit, when each makes sense, and how to decide which is right for your Shopify store.

Short answer: choose points if you want flexibility, gamification, free product rewards and a currency you can brand. Choose store credit if you want simplicity, clear monetary value and a more understated, cashback-style experience. Neither is universally better, and the rest of this guide explains how to decide.

Prefer to watch? View our full video breakdown here:

Points vs store credit: what's the difference?

At a basic level, both systems reward customers for shopping and engaging with your brand. The difference is how that reward is represented and what customers can do with it.

With points, customers accumulate a balance that they can redeem for different rewards.

For example:

• Earn 10 points for every $1 spent
• Earn 100 points for leaving a review
• Earn 500 points for referring a friend
• Redeem 1,000 points for $10 off
• Redeem 2,000 points for a free product

The points themselves can also be branded. Instead of simply calling them "points", a beauty brand might call them Beauty Credits, while another brand might create its own name entirely.

Store credit is much more straightforward.

A customer earns a monetary balance that they can use towards a future purchase.

For example:

Spend $100, earn $10 in store credit.

There is no points conversion to understand. $10 earned means $10 to spend.

That simplicity is one of the biggest reasons some brands choose store credit over points.

The real question isn't "which is better?"

It's:

What do you want your loyalty program to feel like?

Your loyalty program is another customer touchpoint.

If your brand is playful, energetic and community-driven, a points system can give you more opportunities to create an engaging experience around loyalty.

If your brand is premium, minimal and understated, a large points balance, reward catalogue and gamified experience might feel less natural.

That doesn't mean premium brands can't use points, or that every playful brand should use points.

It simply means your reward currency should feel like an extension of your brand.

We've seen this distinction play out across Shopify brands, and it's one of the most useful ways to think about the decision.

When points make sense for your Shopify loyalty program

Points are the more flexible option.

They're particularly useful when you want your loyalty program to do more than simply give customers money off their next order.

1. You want to offer different types of rewards

One of the biggest advantages of points is the flexibility they give you over redemption.

A points-based loyalty program can offer customers different ways to use their balance.

For example:

• 500 points for $5 off
• 1,000 points for $10 off
• 2,000 points for a free product

This gives you more control over the types of behaviours you want to encourage and the rewards you want customers to work towards.

If free products are an important part of your loyalty strategy, points are particularly useful because they allow you to build those rewards directly into the program.

Store credit, by comparison, is fundamentally monetary. It works extremely well when you want customers to accumulate value towards a future purchase, but it isn't designed around a catalogue of different reward types.

2. You want to gamify loyalty

Points also give customers something to accumulate.

That creates opportunities for progression, milestones and gamification.

Instead of simply seeing:

$25 store credit

a customer might see:

2,450 Beauty Credits

with another reward waiting for them at 3,000.

That difference might sound small, but it changes how the loyalty experience feels.

You can create tiers, milestones and challenges around the points balance, giving customers additional reasons to engage with the program.

3. You want to create a branded loyalty currency

This is one of the most underrated benefits of points.

You don't have to call them points.

You can create a loyalty currency that belongs to your brand.

A beauty brand might use Beauty Credits.

A fashion brand could create its own branded currency.

A food or beverage brand could use something that fits its community and tone of voice.

This makes the loyalty program feel less like a generic rewards plugin and more like part of the brand itself.

For brands with a fun or distinctive identity, that's a meaningful advantage.

4. You want to reward more than purchases

Points can also work well when you want customers to earn rewards for different actions.

For example:

• Making a purchase
• Creating an account
• Leaving a review
• Referring a friend
• Following your brand
• Celebrating a birthday
• Engaging with your loyalty program

This makes points particularly useful if your goal is to build a broader engagement ecosystem around your loyalty program rather than simply returning a percentage of each purchase as credit.

When store credit makes more sense

Store credit takes the opposite approach.

Instead of making loyalty more complex, it makes the value incredibly easy to understand.

$10 earned = $10 to spend.

That's the entire proposition.

For some brands, that simplicity is exactly what makes store credit so effective.

1. You want loyalty to feel simple

Customers don't have to understand your points conversion rate.

They don't need to know whether 100 points are worth $1, $5 or $10.

They simply see a monetary balance.

That can make the experience much easier to communicate:

Earn 5% back in store credit with every purchase.

There's very little explanation required.

2. You want to create a cashback-style experience

Store credit works particularly well when the objective is essentially:

Buy from us, get some value back, and use that value on your next purchase.

This creates a very direct connection between the customer's purchase and their next reason to return.

It's particularly compelling for brands where repeat purchasing is the primary loyalty behaviour they want to encourage.

Rather than asking customers to think about collecting points, you're effectively giving them a balance they can use towards their next purchase.

3. You have a premium or understated brand

This is where store credit can become particularly interesting from a branding perspective.

Premium brands often don't want their loyalty program to feel like a constant discounting mechanism.

They may not want large "REDEEM 1,000 POINTS!" messaging, gamified reward wheels or an extensive catalogue of promotional rewards.

Instead, they can make loyalty feel much more subtle.

A customer might simply see:

You have $100 store credit
Earn $15 store credit with this purchase.

The value is still there, but it doesn't have to dominate the shopping experience.

For high-end jewellery, fashion, beauty and other premium categories, that can be a much more natural fit.

Real-world examples: points vs store credit

The difference becomes clearer when you look at how different brands approach loyalty.

Points: TeaDrops

TeaDrops is an example of a brand using a points-based loyalty model.

A points model works naturally here because the currency can become part of the overall loyalty experience.

Customers aren't simply receiving money back. They're earning a branded balance that can be accumulated and redeemed for different rewards.

This is where points can be particularly powerful: they give the brand more creative freedom around the loyalty experience.

Store credit: Miadonna

Miadonna, a high-end jewellery brand, takes a different approach.

Instead of putting the emphasis on points, the customer sees the value of their loyalty in monetary terms.

For a premium jewellery brand, that can feel more understated.

The loyalty benefit is still there, but it doesn't necessarily turn the shopping experience into a heavily gamified rewards program.

Store credit: YouSwim

YouSwim is another useful example.

The brand uses store credit to give customers a clear financial benefit from shopping with them.

The customer can see how much store credit they have earned and use that value towards a future purchase.

Again, the important point isn't that store credit is inherently "better" for premium brands.

It's that the currency can be chosen to complement the experience the brand is trying to create.

Points vs store credit: which gives you more flexibility?

If flexibility is your priority, points generally win.

A points-based system can support a wider variety of reward structures, including:

• Fixed discounts
• Percentage discounts
• Free products
• Multiple redemption levels
• VIP tiers
• Referral rewards
• Engagement rewards
• Branded currencies

Store credit is more focused.

Its strength isn't the number of things you can do with it. Its strength is how easy the value is to understand.

That's an important distinction.

Points give you more flexibility.

Store credit gives you more simplicity.

Neither is inherently better.

What about VIP tiers?

Your choice of currency doesn't have to exist in isolation from the rest of your loyalty strategy.

If you're building a more sophisticated loyalty program with VIP tiers, points can give you additional ways to create progression.

For example, customers could earn points through purchases and other activities while their tier is determined by their spending over a specific period.

This allows the program to become more than a simple discount mechanism.

But store credit can also sit alongside a tiered program if your priority is to keep the reward itself simple.

For example:

• Silver: 3% back in store credit
• Gold: 5% back in store credit
• VIP: 7% back in store credit

The underlying reward remains easy to understand, while the tier structure creates an additional incentive to spend more.

Should you use points or store credit?

Here's the simplest way to think about it.

And remember: these aren't hard rules.

A premium brand can absolutely use points.

A playful brand can absolutely use store credit.

The question is whether the experience you're creating feels right for your customers.

Don't choose your loyalty currency just because everyone else does

One of the easiest mistakes to make when launching a loyalty program is copying the structure of another brand.

"They use points, so we should use points."

But your loyalty program doesn't need to look like everyone else's.

Think about your brand first.

If your customers respond to gamification, progression and community, points give you plenty of room to build that experience.

If your customers value simplicity and your brand doesn't rely heavily on promotions, store credit may be a better fit.

And if you're not sure, start with the customer experience you want to create and work backwards from there.

Frequently asked questions about points and store credit

Can a Shopify store use both points and store credit?

You can, but most brands are better off picking one so the experience stays easy to explain. If you want both, keep their roles distinct: for example, points for reviews, referrals and other engagement, and a cashback-style store credit for purchases. Mage lets you run your loyalty program in either points mode or store credit mode, so you are not locked into one model if your strategy changes.

Is store credit better than a discount code?

For retention, usually yes. A discount code lowers the margin on the order in front of you and can be shared or found on coupon sites. Store credit is attached to the customer and can only be spent on a future order, so the reward itself becomes the reason to come back.

Do loyalty points or store credit expire?

Both can, and it is your decision. Expiry gives customers a reason to return before their balance disappears, but very short windows feel punitive and generate support tickets. If you set an expiry, give customers a reasonable runway and remind them before the balance lapses.

Do customers need an account to use store credit?

Yes. A store credit balance belongs to the customer, so it has to be tied to a customer account to follow them from one order to the next. That is why store credit works best alongside a smooth Shopify customer accounts experience where customers can log in and see their balance.

Points or store credit: the final decision

There isn't a universal winner.

The right loyalty currency is the one that fits the behaviour you're trying to create and the brand experience you're trying to deliver.

Want flexibility, gamification and a branded currency? Choose points.

Want simplicity, direct value and a more understated experience? Choose store credit.

If your loyalty program needs to support both approaches, the important thing is having a platform that gives you the flexibility to choose.

Mage Loyalty supports both points-based and store-credit loyalty programs, so Shopify brands can build a rewards experience around their customers rather than forcing their strategy around the limitations of their loyalty platform.