The "big three" U.S. wireless service companies are fiercely competing for your monthly wireless loyalty, especially as the industry begins to roll out 5G technology across the country.

The two main factors behind customer wireless purchase decisions are usually, one, the strength of the network, and two, the price of the plan. U.S. postpaid subscriber leader Verizon (NYSE:VZ) has historically had one of the pricier monthly plans, but also the best-quality network, justifying its premium price. However, the differences between the different 4G wireless networks aren't quite as big now, and the multiyear transition to 5G could enable competitors to potentially leapfrog Verizon for the wireless network crown.

However, Verizon just introduced a customer-facing innovation that's very smart, and one that could potentially tie its well-off customer base more closely to Verizon's service -- all technically without "discounting" prices.

A young couple happily look at a credit  card while holding a smartphone as a tablet lies  on the table next to them.

Verizon just unveiled a generous new credit card. Image source: Getty Images.

The new Verizon Visa card

Verizon just introduced a new credit card, which operates on the Visa (NYSE:V) card network, and whose loans are backed by third-party credit card lender Synchrony Financial (NYSE:SYF). The card offers fairly generous cash-back discounts on many things people use every day, including 4% back on groceries and gas, 3% back on restaurants, delivery and curbside pickup, 2% back on Verizon purchases, and 1% back on all other purchases. While there are some cards that offer up to 5% back for certain categories, getting 4% back on big-ticket, high-frequency purchases such as groceries and 3% back on restaurants is a pretty great deal, especially for a card that has no annual fee.

However, there's one catch: The rewards points are not actually "cash" back but rather "Verizon dollars," which can only be redeemed for Verizon products and services. New Verizon card customers can also earn up to a $100 in wireless credits over 24 months (or just over $4 per month) when they sign up, and Verizon cardholders can use the  card for Verizon's autopay discount, which can amount to up to $10 per month off the monthly bill. Normally, Verizon requires a debit card or bank account to enroll in auto-pay.

Still, for Verizon customers, the savings from 4% back on groceries 3% on restaurants could amount to a big discount off of their monthly Verizon bill or new device purchases.

Why Verizon is doing this

Verizon currently has the most postpaid wireless mobile customers of any other wireless provider, with 89.9 million postpaid wireless connections as of last quarter. However, Verizon also posted a slight decline in its overall postpaid phone base amid fierce competition in the largely saturated U.S. wireless market. It's likely that spurred the company to look for ways to tie existing customers more closely to the Verizon ecosystem and reduce overall churn, all without having to technically drop prices. In wireless, it's much more expensive to acquire new a customer than to retain one.

In that light, the card product certainly makes a lot of sense. Since Verizon's customer base also skews to the more well-off, given its higher price point and best-in-class coverage, a card was likely a compelling proposition for financial partners Visa and Synchrony. While it's unclear exactly what the arrangement is between Verizon and Synchrony, it's likely Verizon won't be "sacrificing" the Verizon dollar discounts, as those payments will likely come from Synchrony, which aims to collect more on interest and fee income on card balances than it pays out in points.

Thus, the card appears to be a rather elegant solution for Verizon to keep a tighter hold on its leading wireless customer base.

But will it work?

Of course, Verizon isn't the only wireless telecom company offering generous perks in order to keep customers in the ecosystem and paying their monthly wireless bills. AT&T (NYSE:T) is giving away the new HBO Max streaming service to certain subscribers of its broadband plans and its Elite Wireless phone plan. Meanwhile, T-Mobile (NASDAQ:TMUS) in general has a lower monthly subscription price, includes Netflix (NASDAQ:NFLX) with certain wireless plans, and was itself the first to offer financial benefits tied to T-Mobile, with the introduction of a high-yield checking account called T-Mobile MONEY last year.

While Verizon has also offered media perks with its phone plans in the past, such as a free year of Disney+ (NYSE:DIS), the new card, officially launching on Friday, June 26, is its first real venture into financial products. And while the card definitely has some generous benefits, it's unclear as to whether they will be enough to keep hard-to-please and cost-conscious wireless customers in Verizon's premium-priced phone plans.

Expect to see more and more benefit programs coming out of the "big three" wireless carriers now that the industry has consolidated to just three players in the wake of the T-Mobile-Sprint merger. While it may be a competitive struggle for the companies involved, customers should pay attention -- there could be some great deals coming in the months and quarters ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.