American multinational financial services giant American Express (AmEx) has decided to integrate the promising blockchain technology in its membership rewards program. AmEx has partnered with the digital retailer Boxed, for the initial phase of this transformation.
At present, onboarding merchants in a membership rewards program can take months for any large financial services company. Also, Merchant’s inventory systems vary from company to company, hence, targeting individual item on a store’s shelf is very hard currently.
AmEx has a solution to the above issues, thanks to blockchain technology. The company is using the Hyperledger blockchain platform for this project. They will allow the affiliated merchants to create customized membership rewards programs, for consumers holding AmEx cards.
The backend of the platform will have a private channel for each merchant, which will allow information transfer instantly and in a secured manner. On their part, the merchants will create smart contracts, i.e. pieces of code that facilitate legal-like functions such as taking control of an entity based on predefined conditions.
The smart contracts created by the merchants will fulfill the rewards program offers, based on specific terms and conditions defined in the smart contract. When the offers are live, the smart contracts will securely, and automatically, pass the information on the transaction to AmEx. This information exchange will be done via the secured private channel mentioned above.
This way, the merchants have better ability to control their offers, and quickly customize their membership rewards program parameters. For e.g., the merchants can assign bonuses to items at a product or stock keeping unit (SKU) level. On the other hand, AmEx will reserve the right to regulate products or brands and can decline tobacco products from being included in the membership rewards program, for example.
AmEx believes that the new program will allow merchants to also target specific customers. Another crucial advantage of the new program is that AmEx can onboard new merchants within weeks, thus improving their time-to-market significantly.
AmEx, headquartered in New York City, USA, isn’t new to the blockchain technology. They have earlier filed a patent application for blockchain-powered personalized customer rewards system. They had also filed a patent application for a technology solution that will use blockchain to boost the speed of the payment transactions.
