Can Blockchain Boost Credit Card Rewards?

Aug 16, 2018

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Blockchain is one of the most frequently used buzz words in today’s business environment. The technology is based on a system that uses a digital ledger to record transactions. Rather than storing information about those transactions, the exchanges are stored in a secure and verifiable manner inside cryptographic “blocks.” Those blocks are connected in, you guessed it, a chain. The term has earned plenty of recognition for powering Bitcoin and other cryptocurrencies, but the technology itself is doing much more than reinventing the way we look at currency.

Walmart is using blockchain technology to enhance its food safety efforts, and shipping giant Maersk is using it to make major changes to global shipping. Now, the decentralized approach to recording transactions and storing data is changing something near and dear to the hearts of TPG readers: credit card rewards.

Earlier this year, American Express partnered with Boxed to conduct a blockchain-enabled pilot program that allowed Amex customers to earn 5x Membership Rewards points on certain household products from companies like Dove, Cheerios, and Planters. (If you’re not familiar with Boxed, the boxes are quite big. They sell wholesale packages, and you can often find some great deals.) While details on the program were scarce, the primary benefit from this blockchain implementation seemed to be a higher level of personalization. Bonus earnings offers were tailored to individual purchasing patterns. “We were able to prove the efficacy the blockchain capability, and how merchants can leverage their own data and insights to provide better, more personalized offers to their customer base,” Chris Cracchiolo, Vice President of Global Membership Rewards, told me via email.

Cracchiolo said that Amex has plans to expand blockchain to more merchants in the fall, and he called the move a direct response to card members’ requests for more ways to earn Membership Rewards points.

“This new technology will open up new opportunities and channels for card members to earn Membership Rewards points with merchants we know they already love and are shopping at,” Cracchiolo said. “With blockchain, our Card Members will receive offers with a higher level of customization, based on their needs and how they’ve engaged with merchants in the past.”

In addition to an increased level of personalization, it sounds like members can expect an increased number of merchants and offers, too. While adding and on-boarding new merchants and new offers typically takes months, Cracchiolo said that blockchain can reduce that set-up time to just a few weeks. Once they’re up and running, merchants will have more power over what you see and when. “Merchants will be able to control the types of offers they want to market through their proprietary channels as both live in their own ecosystems, and they are not limited to American Express channels or timelines,” Cracchiolo said. “They can create custom Membership Rewards earning structure and assign bonus to items at product or SKU level.”

Only the Beginning for Blockchain

Cracchiolo couldn’t share specifics of future plans but did allude to conversations with other merchant partners about leveraging blockchain. While the Amex pilot marked the first blockchain-enabled loyalty program experiment in the US, there will be many more on the horizon, and they have the potential to eliminate some of the frustrations and hassles of calculating the valuations of points and miles and waiting for transfers between programs to clear. Consider finding an incredible offer to book a Qantas flight, only to wait two days for your Citi ThankYou Points to transfer, or hoping to book a last-minute stay at a Ritz-Carlton property before realizing that it will take two days for your Chase Ultimate Rewards points to appear in your Marriott Rewards account.

“Blockchain can enable a transaction to be recorded and accessed by multiple involved parties in near real time,” Steve Fromhart and Lincy Therattil, research managers at Deloitte Financial Services, wrote in “Making Blockchain Real for Customer Loyalty Programs”, “increasing the chance that a loyalty rewards program provider can cut through coordination inertia to credit points faster.”

That accelerated transfer speed may still be miles away, but I’ll be keeping a close eye on the next year of blockchain activity. Many businesses are investing in blockchain and filing patents for new blockchain applications as they recognize the value of the technology. Let’s hope that value trickles down to credit card users soon, too.

Featured photo by D-Keine/Getty Images

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
Balance Transfer Fee
Recommended Credit
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.