The Loyalty Business on the Fiat Standard: Bitcoin’s Disruptive Potential
In the world of merchant loyalty programs, the use of fiat currency has long been the standard. However, one industry expert is now proposing a radical shift to using Bitcoin as the medium of exchange for these programs, citing the cryptocurrency’s ability to deliver unprecedented economic surplus and efficiency.
John McCabe, who has spent the last decade working on card-linked offer solutions at Mastercard, believes that Bitcoin has the potential to completely transform the way merchant loyalty programs operate. By leveraging the Lightning Network and other Bitcoin-native technologies, McCabe argues that merchants can significantly reduce costs and provide a more seamless and satisfying experience for consumers.
Traditionally, fiat-based loyalty programs require a complex tech stack and a team of people to manage various aspects of the program, from credentializing merchants to rewarding redeeming cardholders. Additionally, all consumer spending is driven through credit card channels, which can be costly for merchants.
In contrast, Bitcoin-based loyalty programs streamline the process by allowing merchants to participate through a self-service portal and fund their marketing budget in real-time with Bitcoin. This eliminates the need for banks and card processors, as well as the associated fees. Transactions are conducted on the Lightning Network, reducing costs even further.
One of the key advantages of using Bitcoin for loyalty programs is the ability to provide real-time notifications and discounts to consumers at the point of sale. This immediate gratification is not possible with fiat-based programs, where discounts may not show up until days later. Additionally, Bitcoin allows for split payments and real-time adjustments to offer values and inventory, giving merchants more flexibility and control.
While there are some challenges, such as reaching a larger audience of Bitcoin users and the lack of transaction history for targeting purposes, McCabe believes that the benefits far outweigh the drawbacks. By attracting the valuable and loyal Bitcoin user base, merchants can potentially see higher margins and a more engaging consumer experience.
Overall, McCabe’s proposal highlights the disruptive potential of Bitcoin in the loyalty business and challenges industry players to rethink their approach to merchant offers. As more businesses explore the possibilities of Bitcoin-native loyalty programs, the landscape of customer rewards and incentives could undergo a significant transformation.
As Michael Saylor famously said, “Buy bitcoin, and wait.” But for those like McCabe, the time to act is now, as Bitcoin’s unique advantages in the loyalty business are too compelling to ignore.
