Loyalty Cards

Can Blockchain Technology Save Outdated Loyalty Schemes?

Usage & Issues

Customer loyalty schemes have been struggling for a number of years now, and consumer’s perceptions are worse than ever, with nearly 90% of consumers having a negative sentiment towards them (1).

Many schemes have not evolved into the digital age, and lack the omnichannel experience that is now demanded by 81% of UK shoppers (2). Retailers will need to bridge this gap in order to create schemes that excite the customer and ensure loyalty across various channels.

The variety of current reward programmes is extraordinary, ranging from basic transactional point based systems (Nando’s Card) to tiered points rewards (Virgin Atlantic Flying Club), to upfront fee systems (Amazon Prime). This variation confuses customers and is a primary source of unclaimed rewards; a sign of an inefficient scheme (3).

Blockchain is The Solution!

Blockchain is likely to revolutionise customer loyalty schemes as we know them, as the powerful technology can be used to fix the aforementioned issues, while at the same time reducing costs for organisations. Blockchain enables a ledger of transactions to be shared with a network of participants (e.g. customers and loyalty scheme providers), this ledger could be used for issuing, exchanging and redeeming loyalty points in a new loyalty form of loyalty scheme.

Benefits of A Blockchain-Based Loyalty Programme

Simplicity – All of the transactions would take place on the same ledger, enabling the storage of various loyalty points in the same ‘wallet’. Consumers could then earn, store and exchange the points from different merchants on a single platform, eliminating the need to keep track of various reward systems and confusing redemption rules.Loyalty Scheme

Speed – Rewards could be recorded and credited to the consumers ‘wallet’ in near real time. This would allow rewards to be redeemed earlier, which increases the chances of repeat purchases (4).

Reduced Costs – Management costs would be reduced as smart contracts will be secure and transparent, reducing costs associated with errors and fraud. It would also reduce customer acquisition costs as the scheme means customers keep coming back.

A variation of this technology has recently been trialled out at the University of New South Wales, in which, almost 60% of participants spent more money than normal during the trial period, more information regarding about this trial can be found here.


  1. https://www.consultancy.uk/news/2317/customer-loyalty-programmes-fail-to-capture-consumers
  2. https://www.retailtechnews.com/2018/02/22/loyalty-schemes-losing-appeal-with-customers-rtn/
  3. https://www.paymentsleader.com/reinvigorating-card-loyalty-with-instant-gratification/
  4. http://www.bridge2solutions.com/the-power-of-the-burn/