There are two types of people in this world: those that lug around an overflowing vessel brimming with loyalty cards, vouchers and gift certificates, and those that recognise the value but simply don’t want the excess cargo. Maybe they’ll have one or two loyalty memberships for their favourite establishments, but by and large they actively skip out on deals to avoid the hassle.
Loyalty points, rewards, gift cards, service credits etc. all fall under the umbrella of branded currency – a store of value and a medium of exchange for goods and services from a specific brand or merchant; this includes any physical or digital form of payment from a merchant or brand, such as coupons, loyalty points, and gift cards.
Branded currencies are well integrated into the consumer-brand relationship – in 2017, Americans held a total of 3.8 billion unique loyalty program memberships, an average of 11.6 memberships per person. 64% of consumers stated that they would not consider signing up for a credit card without an associated rewards program.
It’s hard to deny the prevalence of branded currencies, but the technology behind these programs remains inflexible and cumbersome. These inefficiencies have resulted in the accumulation of significant idle capital – more than $16 billion in points goes unused in the United States every year. DigitalBits, a protocol layer blockchain targeting consumer digital assets including branded currencies, looks to address these pain points and enhance the value perceived by both brands and consumers.
Branded currencies are making waves
Over the last year, interest surrounding branded currencies has exploded. A major contributor to this hype has been the development of Facebook’s Libra Project and Walmart’s exploration of a stablecoin patent.
These new initiatives are being driven by some of the world’s largest brands. Sure, they may be polarizing, but that’s part of the reason they have drummed up so much interest.
Walmart and Facebook are not just interested in creating their own branded currency – they want to create a branded stablecoins using blockchain technology – great for crypto enthusiasts!
Why? This shows that large brands are aware of the power this technology holds, and they want to use it to significantly improve how they do business, including streamlining payment processes to building loyalty features right into the customer experience.
What’s so great about branded stablecoins?
A branded stablecoin is arguably a step towards a future where interoperability reigns supreme. The main issue with today’s branded currencies is a lack transfer and tradeability, as well as changing rules and regulations that make redemption difficult. Consumers are not able to optimize their consumption because in some cases, the points they have can’t be used towards the items that they want. These issues negatively affect the perceived value of branded currencies today. Having $100 worth in points doesn’t do very much if you can’t buy the things that you want with it.
Ease of use
Branded stablecoins will allow issuing brands to enhance the consumer experience, crafting ecosystems in which loyalty features can be directly built-in. Consumers will be able to easily collect, manage and utilize their branded currencies, as opposed to managing a separate program.
Vouchers, gift cards, loyalty points – they all have a shelf life. As a customer, it isn’t nice to have my loyalty recognition dissolve after a set time period. That’s why a great feature of branded stablecoins is the lack of expiry date, so customers can hold on to them until the time is right.
Better for brands (and for you?)
Payment processors charge hefty fees, which can be anywhere between 2-5% for larger providers such as Visa and Mastercard. By offering a branded stablecoin brands would be able to drop the reliance on these payment processors and instantly notice savings. This can also help to streamline many of the brands internal operations.
As a result, this would create an opportunity for brands to pass on savings to their consumers and level up their loyalty reward scheme. It could be a win-win.
Beyond cost savings, branded currencies have the potential to revolutionize the exchange between brands and consumers, adding value for all parties involved, as seen below.
A real, working solution
DigitalBits is a blockchain solution that is working directly with brands to support the development of these new age branded currencies, while supporting the transition of legacy programs to blockchain. The project aims to allow brands to make an imperceptible leap to blockchain technology where their customers notice a huge improvement but are unaware of the underlying reliance on blockchain and cryptocurrency.
DigitalBits enables the tokenization of both new and existing points programs. Even better – by using the DigitalBit’s solution brands are increasing the interoperability of their loyalty ecosystem – DigitalBits decentralized exchange can facilitate the exchange of one branded currency for another. Turn those points you accrued at your favourite coffee shop into airline miles towards your next holiday.
Learn more about DigitalBits:
- The Daily Chain Primers: DigitalBits Introduction
- BlockFyre Coin Research: DigitalBits
- DigitalBits + Pundi X Interview with Ashton Addison
- Bringing DigitalBits to the World
The Daily Chain
*Disclaimer – DigitalBits are our Media Partners and therefore this content is sponsored by them. The fees paid by this project are used to pay for The Daily Chain salaries, dev work, hosting services, travel expenses etc.. that are required to make this company a success and continue to provide the community with great content on a daily basis.