Credit and debit cards have been used to buy products and services for years now. And to incentivise the use of these plastic payment services, companies provide their loyal customers with points or rewards. These reward programmes not only help companies build brand loyalty, but they also add significant value for customers.
Now as cryptocurrencies rise in popularity, credit card companies have started to offer crypto like Bitcoin, ETH, or stable coins instead of airline miles and hotel points. It’s a trend that could signal the unification of the credit cards industry and the technological advancements of blockchain.
Why cryptocurrency can be beneficial to rewards programmes
Customer loyalty is the name of the game today. Customer retention is just as important as finding new ones. It’s one of the reasons why the loyalty programme industry has become so essential, even though it has only been around for a relatively short period.
According to the industry benchmark COLLOQUY Loyalty Census, loyalty programmes in US-based companies have grown by 20 percent to $3.32 billion in 2015 from $2.65 billion in 2012.
One of the biggest upsides of crypto-based loyalty points is that they can be exchanged for fiat currency or other cryptocurrencies. Normal loyalty points, on the other hand, can only be redeemed for certain products and services. If you are not in need of these products and services, then your loyalty points hold no value.
Also, with a normal loyalty programme, the company offering you the benefits not only knows your name and address but is also privy to your spending habits, redemption patterns and other unique consumer information. They can use this data to spam you with ads or sell this data to other parties.
However, with crypto-based loyalty programmes you get higher levels of privacy and anonymity. Your transaction details are linked only to a wallet address, and it would take a fair bit of investigating to link this address with a real-world identity.
Lastly, crypto-based rewards can appreciate tremendously over time. That being said, these assets can also dip in a similar manner. However, most companies offering crypto-based loyalty programmes would have some sort of fixed value to ensure you are safeguarded from the market volatility of cryptocurrencies.
Companies implementing crypto-based loyalty programmes
Many organisations have already started to offer crypto as loyalty rewards. For instance, in 2021, Crypto exchanges Gemini and BlockFi launched credit cards that offered bitcoin as loyalty rewards. The American fast-food chain, Shake Shack, is also currently offering bitcoin rewards for customers who use the Cash app to buy their food.
Northern Pacific Airlines is planning to offer flyCoins to its frequent flyers. The airline has also promised that the value of the flyCoin token will not drop below 2 cents per coin as a way to shield customers from the volatility in cryptocurrency. They are also exploring partnerships with crypto exchanges that will enable users to use these tokens to buy free flight and airline elite status.
Clearly, there are multiple advantages of using cryptocurrency as a rewards programme. And implementing a blockchain network for the rewards programme of a company will make the system of offering rewards secure and faster. Even more so, the world is slowly turning into blockchains and decentralised finance as technology grows. Programmes and institutions that do not want to be left in the dust will need to adapt to this emerging technology.
