Loyalty Programs on the Blockchain

Loyalty programs are ripe for disruptive innovation that would make them easier to use. Blockchain may just be the answer.

Blockchain enables a ledger of transactions to be shared across a network of participants. When a new digital transaction occurs (for example, a loyalty point is issued, redeemed, or exchanged), a unique algorithm-generated token is created and assigned to that transaction. Tokens are grouped into blocks and distributed across the network, updating every ledger at once. New transaction blocks are validated and linked to older blocks, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases.

Adopting blockchain will enable companies to rapidly add and maintain loyalty partnerships without adding complexity to their programs. A robust, frictionless partner network could mean many more redemption options outside of the core product.

Participating in the initial structuring of commercial agreements and partnerships will be essential to protecting critical loyalty program components, including currency value, customer data and relationships, and transaction costs.

Goals

The goal of the Blockchain is to solve the limitations of today’s implementation, in particular:

Real-time
redemption and issuing of points

Scalability
and Performance

Security and Trust as more partners, brands and merchants interact with the system

Centralised Issuing - distributed and resilient infrastructure with no single point of failure

Benefits

Benfits for Customers

  • Be more engaged members with higher levels of trust in the system and many more options for redeeming their rewards

  • No requirement for cards – all rewards are accessible and redeemable directly from the wallet

  • User-friendly and transparent control of rewards’ expenditure

  • Rewards are credited directly to the customers wallet and immediately available.

  • Crypto-tokens don’t expire and may increase in value as demand increases

Benfits for Partners

  • A single, simple rewards system that allows points to be quickly redeemed anywhere helps increase repeat sales

  • Opportunity to vastly diversify loyalty programs offering rewards for a range of consumer actions beyond making purchases

  • Customers can send and receive tokens to and from each other greatly expanding brand awareness

  • Reduced system management and administration costs

High Level Architecture

Architecture

Our Expertise

Blockchain offers the potential to provide faster and more secure transactions, streamline and automate back-office operations, and reduce costs by leveraging cloud-based technologies. 

Is your organization ready to seize the potential of blockchain?

We can help. With expertise in 10 countries, we focus on assisting financial and non financial service firms identify an effective use case strategy to derive maximum blockchain benefit.

Embracing a rapidly-advancing new technology that disrupts business as usual is not easy. Our Digital Ledger Services professionals are dedicated to working with you to create relevant, scalable solutions that drive value for your organization. Our tailored approach incorporates strategy, security, cost, privacy, performance, risk management and more.

Loyalty Program Blockchain Reference Implementations

Air Asia

Air Asia - Tony Fernandes, CEO of the $3 billion company which is publicly listed in Malaysia said “Our loyalty card where we have our loyalty program BigPoints, and I think those BigPoints can be easily transferred to the blockchain. We have a product that can be a currency in Big Loyalty, and we’re building a payment platform so the two can marry quite nicely. We have an ecosystem that enables you to use that currency, there’s no point having a currency that can’t be used,” Fernandes’ newest strategy for AirAsia is to move into financial services as it aims to grow to 100 million customers.

Starbucks

Starbucks is likely to utilize blockchain technology as part of a new payments app according to executive chairman Howard Shultz. Starbucks will introduce a "proprietary digital currency" in conjunction with the payments app. "I think blockchain technology is probably the rails in which an integrated app at Starbucks will be sitting on top of", he commented. "I believe that we are heading into a new age, in which blockchain technology is going to provide a significant level of a digital currency that is going to have a consumer application", he remarked during the earnings call.

Rakuten

Japanese e-commerce giant Rakuten is launching a cryptocurrency. Rakuten CEO Hiroshi Mikitani unveiled the "Rakuten Coin" initiative - which will be used as part of the company's points-based loyalty rewards system. Mikitani pitched the project as a way to help the company expand its international customer base. The firm intends to eventually make Rakuten Coin available for use within all of its businesses, which in addition to its global marketplace includes a travel company, an on-demand video service and mobile messaging service Viber, among others. It also hopes to use the cryptocurrency to attract more international customers by positioning it as a "borderless" payment method that could mitigate exchange rate fees. The idea is to mobilize the interest around cryptocurrencies in a bid to attract new customers to its loyalty program, which has awarded more than $9 billion worth of points since it first debuted in 2003.