IBM and UnionPay are collaborating on a way to use the blockchain for trading loyalty points. In a proof-of-concept reveal, the two firms have unveiled a platform that allows customers to trade their loyalty points (those earned through purchases and other incentivized behavior) with one another.
“The joint research efforts between China UnionPay E-payment Institute and IBM Research has enabled the successful exchange of bonus points among banks using blockchain technology, which embeds trust into transactions,” noted He Shuo, director of China UnionPay’s Electronic Payment Research Institute.
The prototype of the service was build on a private network of the beta-version Hyperledger Fabric network and was designed to showcase how banks can leverage said platform to encourage the swapping of loyalty points among consumers. The system is also designed to integrate online and offline channels via blockchain. That means China UnionPay cardholders will be able to go to supermarkets and malls equipped with special point-of-service (POS) devices and exchange bonus points for goods.
The positioning of the product makes it seem as though the desired consumer audience is those who are new — and those who the company is trying to hold on to via a more opened up loyalty program. The program will also create incentives for banks to further open up their programs, according to its designers.