Financial services giant American Express launched a blockchain-based rewards program in partnership with digital retailer Boxed on Wednesday.
The company announced that it was “leveraging Hyperledger’s blockchain technology” to let merchants create custom Membership Rewards programs for American Express cardholders. Its initial trial with Boxed will allow members to earn five times the normal number of points on certain products, according to a press release.
American Express will create a private channel on its blockchain with each merchant to facilitate information transfer. Merchants can then create smart contracts which automatically enable fulfill rewards program offers. Further, “once the offers are live, when a Card Member makes an eligible transaction at the merchant, the smart contracts will automatically pass the anonymized information on the transaction to American Express using its private blockchain channel.”
As a result, the merchant will be able to control what offers they are making, as well as customize its Membership Rewards structure, according to the press release. Further, the merchants will be able to “assign bonuses to items at product or [stock keeping unit] level.”
That being said, American Express reserves the right to regulate the products or brands being promoted.
The company believes it can set merchants up with the new system “in a matter of weeks” versus the months it currently takes to onboard a new partner, according to the release.
It also believes that using a blockchain will require minimal work on the merchant’s side, further helping streamline the onboarding process.
Last year, American Express filed a patent application outlining a possible rewards program that would be stored on a blockchain.
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