Traditional loyalty programs face persistent challenges: accounting liabilities, limited transferability, and restricted redemption options. Despite these limitations, most Americans belong to nearly 15 different rewards programs.
Coinme CEO Neil Bergquist sees an opportunity to transform these systems through blockchain technology. “Think of it kind of like a rewards program where a company can tokenize some type of a reward and be able to use that as a reward when people make purchases or do a particular behavior, then redeem those tokens for some kind of value product or service,” Bergquist explains.
Breaking Free from “Loyalty Islands”
Traditional programs create “loyalty islands” where points earned at one retailer remain trapped within that ecosystem. Tokenized rewards offer a fundamentally different approach by enabling interoperability.
“Your Starbucks points are unique to Starbucks and only able to be used at Starbucks,” notes Bergquist. “What if Starbucks points were on a blockchain and there was a free market around them? That certainly is a very interesting concept.”
Implementation Process
Coinme’s enterprise API platform makes implementing tokenized loyalty programs accessible through a structured process:
- Token Design and Issuance
- Businesses create branded digital tokens with specific parameters
- Define total supply, distribution method, and utility
- Wallet Integration
- Customers need digital wallets to receive and manage tokens
- Coinme offers white-labeled solutions or direct integration
“When you create an account with Coinme, you’re also creating a wallet,” Bergquist explains, “simplifying the user experience compared to traditional cryptocurrency transactions.”
- Transaction Processing
- When customers complete qualifying actions, systems trigger token distribution
- The process happens in the background, requiring no special knowledge
- Redemption Network
- Tokens hold value within the issuing business
- Among partner businesses (cross-brand promotions)
- In the broader cryptocurrency ecosystem
Business Advantages
Tokenized loyalty programs offer several benefits over traditional points systems:
- Reduced Liability: Traditional points appear as balance sheet liabilities; tokenized rewards can reduce accounting complexities
- Real-Time Analytics: Blockchain provides immediate visibility into customer behavior
- Enhanced Perceived Value: Rewards with utility beyond a single store may be valued more highly
- Network Effects: As more businesses accept the same tokens, each participant benefits
“Incentivizing people to custody digital currency on their platform is one area where that could be offering free custody or offering free trading in order to get customers to use their product,” notes Bergquist.
MoneyGram Example
Coinme’s partnership with MoneyGram demonstrates real-world implementation. In 2022, “MoneyGram selects Coinme to power its mobile-based crypto offering.”
This integration allows MoneyGram to offer cryptocurrency rewards to remittance customers, providing several benefits:
- Customers accumulate digital assets that may appreciate
- Recipients receive value without traditional banking infrastructure
- MoneyGram gains competitive advantages over other transfer services
Implementation Challenges
Despite the potential benefits, hurdles remain:
- Regulatory Uncertainty: The landscape for tokenized rewards remains unclear in many jurisdictions
- Customer Education: Many consumers still lack familiarity with digital wallets
- Technical Integration: Legacy systems may require significant updates
- Market Volatility: Token values could fluctuate if exchangeable for other cryptocurrencies
Flexible Approach
For businesses considering tokenized loyalty, Coinme offers a modular approach. “Because Coinme has these baskets of infrastructure, we’re able to allow the partner or the token project to really pick and choose the user experience that they want to provide,” explains Bergquist.
This flexibility allows companies to start small and gradually expand as customer adoption grows—demonstrating how blockchain can transform existing business processes rather than simply creating parallel systems.
