Loyalty Programs: What Your Point of Sale Can Automate, and What Quebec Law Requires

Setting up a loyalty account at the counter used to be simple: a stamp on a paper card, or a name written in a notebook. On a modern point of sale, the same idea becomes a software module that tracks every customer automatically, with no paper to lose. But now that Quebec's Consumer Protection Act specifically regulates loyalty programs, turning that module on is no longer just a setting to switch on.

Why keeping a customer costs less than finding one

According to the Business Development Bank of Canada (BDC), keeping an existing customer is generally far cheaper than attracting a new one. A relatively small share of a business's customers often accounts for most of its revenue.

This matters most for businesses built on repeat visits, such as a restaurant, a hair salon or an auto repair shop, where a large share of revenue comes from the same customers coming back rather than from one-time buyers.

BDC suggests a concrete way to set a target: if your customers buy from you three times a year on average, aiming for 3.3 times turns that into something measurable, tracked month by month rather than hoped for in general. A loyalty module is meant to measure that frequency, using the data your customer relationship management (CRM) system already holds, not just to hand out rewards.

Before turning anything on, it is worth estimating what a returning customer is actually worth to your business compared with a one-time buyer. That calculation, not the software, decides whether a loyalty program makes sense for you.

Punch cards or a points system

Point-of-sale systems that offer a loyalty module generally offer two formats. On Clover, for instance, the module is called Customer Engagement, and it distinguishes between punch cards and a points system.

A punch card rewards a specific visit or purchase: after a set number of visits, often seven or eight, the customer receives a reward. This format suits a business that wants to push one or two specific items, such as a café offering a free drink after a run of purchases.

A points system instead calculates a value based on the amount spent or on certain qualifying items. It suits a business where the average sale varies a lot, such as a retail shop or an auto repair garage, where rewarding every dollar spent makes more sense than rewarding every visit.

The module does not replace service. It remembers what staff do not always have time to track: who comes back, and how often.

Enrollment generally happens one of three ways on a terminal with the module active: printing a code on the receipt that the customer activates by text message, offering an app where the customer checks in on each visit, or letting customers register directly by text or email right on the terminal's screen, which avoids installing anything on their phone.

What Quebec law requires before you turn a program on

Quebec's Office de la protection du consommateur (OPC), the provincial consumer protection agency, sets out specific rules for merchants running a loyalty program under the law.

First, a merchant needs the customer's agreement before enrolling them in a program. A customer does not become a member simply by paying with a card or handing over an email address for an e-receipt.

Second, a merchant cannot reduce, to the customer's disadvantage, the number of points already earned. Once exchange units are awarded, they stay earned, even if the program's rules change later.

Third, points do not simply expire because time has passed. They can only expire after a prolonged period of inactivity on the account, and only once the merchant sends a notice between 30 and 60 days before the expiry date. That notice can state only that inactivity will cause the points to expire on a specific date.

Some programs fall outside these rules. According to the OPC, programs are exempt when their exchange units can only be redeemed for:

• goods or services worth $50 or less each
• a single specific good or service, set at the time the customer joins

A café offering a free coffee after ten purchases typically falls into this exemption. A points program redeemable across a wide range of products, if it exceeds those thresholds, is generally subject to the rules above.

Before you turn the module on

If your point of sale offers a loyalty module, first check how it captures the customer's consent to enroll: simply tapping a card is not enough. Then check whether the software lets you configure an inactivity notice that matches the 30 to 60 day window, rather than a fixed expiry after one year. Also check whether the customer can see their accumulated points history, rather than it sitting buried in a report only the merchant sees. Ask your terminal provider these questions before you turn the module on, not after your first customers have already signed up.