Blockchain for Loyalty Programs

Blockchain for Loyalty Programs

Jun 25, 2018

This article was updated with a quote from a Loyyal representative.

An immutable database that’s intentionally resistant to tampering with lets you can track points with them. Points, of course, are the imaginary currency we acquire at grocery stores, airlines, and hotels, among other things. We’re talking about loyalty and rewards programs.

Traditionally, you join a loyalty program, and it works with just that store brand. You acquire points and discounts that work just with that brand. Occasionally, there are partnership programs, like credit cards that accumulate airline miles, or cards that work with hotel points (as AMEX and SPG used to do). The problem is that these points represent a liability to the brand running the program. Points can be cashed in at some point for reservations or products with value. Points also represent a limitation for users—you have to belong to a hundred loyalty programs in order to accrue any benefit.

Using a blockchain can change the equation significantly. If you put loyalty programs and points accrual on the blockchain, you can reduce liability, and make it possible to manage multiple partner brands with relative ease, essentially creating a wallet and exchange for loyalty points. Loyalty incentives can flow across brands, at the discretion of the brand owners. Points become represented by tokens usually tied to ethereum, making them have utility and value.

Who’s using blockchain for loyalty rewards programs?

IncentIncent rewards you with a digital currency that can be shared, saved or exchanged and will never expire, using a Chrome extension. The INCT platform is built on Waves and had an ICO in 2016.
LoyalCoin LoyalCoin recently completed an ICO and is based the NEM platform. Its LoyalWallet is available on Google Play.
LoyyalAn universal loyalty and rewards platform that enhances its customers loyalty infrastructure with distributed ledger technology. It does not plan to conduct an ICO but can enable its customers to issue a coin if they wish.
PraviciPravici is a consulting that tokenizes existing loyalty program. It converts points to tokens based on its Hyperledger blockchain.
QiibeeBlockchain-based loyalty ecosystem on which a brand can build its very own loyalty application.

Note that there are different approaches being taken. Qiibee is creating coins for each new partner: For example, their site says it is “partnering up with Sausalitos, Germany’s leading cocktail bar and restaurant chain. With their contribution in our private sale, now they can use their QBX to create their own token Sausalitos Coin and use the qiibee infrastructure.”

Incent uses its INCNT coin, and a neat little Chrome extension to help while shopping for the ultimate pair of shoes, ordering your favorite food, or just spending time online. As exampled on its website, “through the Toolbar we record your top line URL, and reward you for your time spent online, up to $1.00 AUD in Incent each day.”

Pravici and Loyyal have decided not to create a rewards token itself. They provide a platform and  consulting services that lets companies migrate existing loyalty programs to a blockchain. Thom Kozik, Loyyal’s chief commercial officer, says that based on the company’s four years in the market, customers “care most about *their* brand presence with their members, and aren’t interested in some new uber-loyalty-currency-du-jour taking primacy over that.”

Industry-specific, technology-specific or broad general-use platforms may grow side-by-side as they compete for customers and end users.

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