AmEx pilots blockchain-based loyalty rewards with Boxed
- American Express is launching a blockchain test with Boxed that allows the online wholesale retailer to customize rewards for cardholders, PaymentsSource reported.
- Through the test, which stems from AmEx's participation in the blockchain framework Hyperledger Project, the credit card company will create a private network for Boxed to transfer information. Based on this system, merchants like Boxed can create smart contracts to fulfill rewards program offers. When offers are made to cardholders, the smart contracts send information about the transaction to AmEx and the private blockchain network anonymously so that it can't be traced back to individual cardholders. AmEx will be able to track the rewards offers, however, to ensure the brands and products align with its values and merchant agreements.
- AmEx rewards members will receive 5x the rewards points on certain products and brands during the test period, per PaymentsSource. AmEx said it plans to expand the test to other retailers to create tailored rewards offers via merchant platforms, which it will manage through the blockchain network. The pilot with Boxed follows AmEx's decision last month to shut down Plenti, its multi-merchant loyalty program, which struggled with a high redemption rate and unstable leadership and saw several retailers drop out before its shuttering.
If AmEx can successfully establish a loyalty rewards program built on a blockchain framework, it would be another step for the ledger-based technology in reaching mainstream adoption and delivering tangible value to businesses and consumers. Marketers are watching the blockchain space closely for its promises of heightened security and transparency, but widely-implemented solutions from recognizable brands are fairly rare at the moment. AmEx is heavily incentivizing its customers to try out the pilot with the hike in rewards points, which could draw interest and also benefit merchant partners like Boxed.
Two-thirds of major companies report plans to integrate blockchain into their businesses in some way by the end of this year, according to a forecast from Juniper Research. However, many of those early tests aren't necessarily on the consumer side. For example, Walmart is using blockchain to track food products through its supply chain, and Unilever is working with IBM on a blockchain product that increases efficiency and transparency within the CPG giant's digital advertising ecosystem.
Loyalty programs, on the other hand, directly benefit customers by giving them access to exclusive deals and rewards and help brands collect valuable data. However, there's no one-size-fits-all approach to loyalty programs, as evidenced by Plenti's sputtering out. Some brands also find it difficult to deliver the level of personalization needed to make loyalty programs work, though blockchain could aid in the those efforts.