Major corporate move into loyalty points market shows growing awareness of value of rewards programs
Bakkt is planning on releasing a loyalty points wallet app (on the left) sometime in the future and MyCurrency recently released its app for storing and issuing loyalty points, showing growing market recognition of the monetary value of Rewards Programs.
A major player, Bakkt, is planning to enter the loyalty points market, signalling the growing recognition of the potential of loyalty and rewards programs to act as an alternative to cash.
The Bakkt app will display a user’s cash, cryptocurrency, rewards reserves, and game points, showing the cash value of each, and allow users to convert between the four.
The app will use the Intercontinental Exchange, which is backing Bakkt, for cryptocurrency to cash conversions.
For loyalty points to cash conversions, Baktt is partnering with sponsors of major rewards programs, like airline points, to allow consumers to exchange their points with the sponsor, for cash.
According to a Fortune article on Baktt, these direct relationships are possible because major corporations are interested in buying back the points they issue to reduce their liabilities:
The Bakkt plan addresses a pressing need for the sponsors of big corporate rewards plans, dominated by hotels, airlines, and banks: These companies often have billions of dollars in liabilities sitting on their balance sheets in the form of unused points. The major sponsors in the U.S. alone are sitting on a cache valued at $160 billion. In today’s strong economy, travelers are using their airline rewards points at a relatively low rate. But if the economy turns down, consumers could start cashing in heavily, causing a sudden rush of losses for the carriers. Today, points turn over on average at the extremely slow pace of around 30% a year.
According to the Bakkt team, the CFOs they have spoken to are looking for a platform that enables them to better smooth the rates of redemption by offering to purchase points in a marketplace.
Bakkt hopes to ultimately make it possible for consumers to spend their loyalty points at any retailer, by instantly converting them to cash through this direct buyback mechanism, at the point of sale.
While the launch of the Baktt app is still months or possibly years away, the MyCurrency app has just recently been made available on the App and Play Store and is ready to enable any individual or business to create their own currency or loyalty points program.
Since launching, MyCurrency has been promoting the idea that enormous promise rests in empowering individuals and businesses to issue their own currency, that get its value from their own goods/services. In line with this, our app makes the process of creating a currency backed by a person/business’ products and services simpler and easier than it’s ever been, and most importantly, completely free.
MyCurrency believes that in the future these kinds of goods/services backed micro-currencies will be a dominant form of payment, and will bring about a more vibrant and decentralized economy with financial power being more widely distributed.
These micro-currencies will fill gaps in availability of money left by government-issued bank currency, resulting in higher volumes of commerce and thus a more integrated and productive economy.
When every individual can create their own currency, and when people come to be accustomed to accepting such micro-currencies as payment for purchases, purchasing power comes to depend only on the productive potential of individuals.
The entrance of Bakkt into the loyalty points market is an indication that this future is getting closer, as the idea of what constitutes money broadens, giving individuals more opportunity to engage in cooperative trade.