News Analysis: Amex Shows How Blockchain Will Transform Loyalty Rewards

New blockchain technology for use in promotions promises to disrupt points management technologies in the loyalty world, as well as create exciting new opportunities for reward suppliers. 

American Express has announced a new blockchain technology, otherwise known as a “distributed ledger,” that will enable its retail partners to provide bonus points for specific products they need to move and provide Amex with until now unavailable data on product sales, according to a May 31, 2018 article in American Banker: “Has Amex Found a Data Gold Mine With Its Rewards Blockchain?” 

 

This is good news for reward suppliers because the ability to more precisely target incentives and the data that comes from such technology will likely generate more points. 

 

Using the blockchain, merchants for the first time can offer the Amex reward program on their own websites and apps, rather than through the card company’s channels, the article explains. While retailers have traditionally withheld product sales data from American Express, the ability to offer points for specific actions on their own platforms gives retailers a big incentive to participate. It also gives American Express the ability to use analytics and artificial intelligence to more carefully target bonus points.

 

Use of blockchain technology for promotional and loyalty programs does not face the risks of blockchain currency, because in this case the issuers determine and guarantee the value of points rather than the market. The blockchain merely serves as a common ledger that points issuers can use to more precisely manage point distribution. This in turn could result in a bonanza for the rewards industry, as marketers are able to more carefully calibrate, and therefore increase the effectiveness of, points programs.