If you reward your loyalty program members with money immediately (e.g., in the form of a cashback or a balance that they can accumulate over time), you will have very little flexibility in shaping the reward structure down the line.
Points give you much greater flexibility as you can alter the reward structure over time, have non-monetary rewards, and more easily control how quickly customers reach certain loyalty levels.
To use points to the fullest extend, you should consider whether it’s better to Build your loyalty program with tiers, not balances.