Two Big Acquisitions Signal Industry Innovation, Greater Scale

The purchase of the Bridge2 Solutions loyalty redemption platform by Bakkt is part of a bold strategy to use cryptocurrency to disrupt the entire consumer loyalty and payments platform. The purchase of SVM by Blackhawk is part of a continued roll-up strategy to gain more market share in a business that requires scale.

 

Some suppliers in the traditional consumer loyalty market might have breathed a sign of relief that the Covid-19 crisis may slow down the ambitious efforts of Bakkt, a division of Intercontinental Continental Exchange (ICE). ICE is a cryptocurrency futures market that aims to disrupt the traditional loyalty and payments platform. 

 

The acquisition of Bridge2 Solutions in February is reportedly part of a two-part strategy to 1) disrupt the loyalty market by creating a universal app through which consumers can manage and redeem all their points from multiple programs via the web or at retail, and 2) even more ambitiously to enable to bypass the high costs of the current credit card processing system. This is not the first time companies have attempted to use the blockchain for loyalty applications. See RRN: News Analysis: Amex Shows How Blockchain Will Transform Loyalty Rewards.
 

The ICE platform uses the cryptocurrency marketplace platform and marketplace of Bridge2 and other solutions to create a single redemption currency usable across multiple online retail options and for merchants to use the blockchain to manage payments. It also includes a way for organizations to manage, buy and sell points. While the payment platform promises significant cost savings for merchants, it requires them to change their payment systems. Anyone who has tried to sell any new system to merchants knows the challenges involved. That said, the current crisis and the need to hit the re-set button on their businesses now might make merchants more amenable to a new payment processing system. Click here for more details from Fortune.com.

 

On the other hand, the growing concept of “surprise and delight” rather than points-based loyalty programs could eventually pose a threat to the entire model of points-based platforms as surprise and delight have lower fixed costs and liabilities than points program with the potential for making a greater emotional impact. 
 

The Covid-19 Crisis did not stop Blackhawk Network from completing its acquisition of SVM Cards, a leading provider of physical and digital open- and closed-loop prepaid cards. Blackhawk says the purchase expands its offerings in the closed-loop space; acquires additional B2B and incentive business accounts and a new market for its own offerings. Because of the low margins in gift cards, scale is critical to growth.