Historically, loyalty programmes have existed since the 18th century, starting with “premium marketing”, a term coined by American retailers, that gave customers copper tokens with purchases redeemable for products on future purchases. In early 1900s, loyalty programmes underwent a transition, going from copper coins, to stamps, to clipping box tops or the likes of Betty Crocker’s coupons, printed on the outside of the packages. Moving into the 2000s loyalty programmes shifted into Card Linked Offers (CLOs) connecting offers or discounts to customers’ credit cards or debit cards, redeemable at point of sale. Loyalty programmes have evolved well beyond tangible loyalty points. Recent years have seen the metamorphosis of CLOs and stamps to online and mobile loyalty programmes.


The reason loyalty points have existed for years is because there is value in cultivating a loyal customer. It is more profitable for a business to focus on the retention of a selected few rather than the acquisition of a mass of brand new customers. Existing customers are 50% more likely to try new products and spend 31% more, when compared to new customers. Businesses recognize that it is not as costly to understand and reward their current customers.


Critics have pointed out issues with loyalty programmes, including:

  • Discount goods and the expenses of partaking in these programmes do not generate a good return on investment.
  • Loyalty cards do not offer any real value to customers..
  • Customers’ personal data is collected and has potential for abuse.
  • For customers, loyalty points verge on useless as it is not fungible (no value), value is not extracted before expiration, and, when redeemed, give low returns.
  • For merchants, giving out loyalty points can amount to large book liability that is unmanageable or impossible to offset.


Companies are now considering the possibilities that Blockchain presents, given they can leverage the reduction in costs and inefficiencies that are presented when disruptive technology affects a particular industry. In the case of loyalty programmes, Blockchain can, due in most part to the reduction in inefficiencies and associated costs when technology disrupts business activities benefit tremendously from the technology.

According to the 2015 Colloquy Loyalty Census, the average U.S. household participates in 29 different loyalty programmes. For those customers participating in multiple loyalty programmes Blockchain can offer instant redemption and exchange for multiple loyalty points in various currencies through a single platform as use of a single wallet means they would not have to deal with each of their loyalty programme’s options and / or redemption rules.


Two terms, fungibility and interoperability, come to mind when one considers what Finterra can do for loyalty points. Customers will finally have their concerns acknowledged when Finterra provides an open and secure marketplace where customers trade loyalty points, switching between programmes, which actually give value and merchants can reduce book liability by providing market liquidity at a discounted rate.

With Blockchain, we have transported into a new stage of the digital age. The Blockchain technology will continue to disrupt areas that require an upgrade until the issues are resolved.

Reference here